ASPEN BANCSHARES, INC.
Proxy Statement
Special Meeting of Shareholders
To be Held on May 16, 1997
and
ZIONS BANCORPORATION
Prospectus
Up to 800,000 Shares of
Common Stock
This Proxy Statement/Prospectus is being furnished to the shareholders
of Aspen Bancshares, Inc. ("Aspen"), a Colorado corporation, in connection with
the solicitation of proxies by its Board of Directors for use at a Special
Meeting of Shareholders of Aspen to be held on May 16, 1997 (the "Special
Meeting") and at any adjournments or postponements thereof. This Proxy
Statement/Prospectus and accompanying form of proxy ("Proxy") are first being
mailed to the shareholders of Aspen as of April 16, 1997 (the "Record Date") on
or about April 18, 1997.
At the Special Meeting, the shareholders of Aspen will consider and
vote upon a proposal to approve and adopt the Agreement and Plan of
Reorganization dated as of November 19, 1996 as amended on March 11, 1997 (the
"Plan of Reorganization"), between Aspen and Zions Bancorporation, a Utah
corporation ("Zions"), pursuant to which Aspen will be merged into Zions with
Zions being the surviving corporation (the "Reorganization"). Upon consummation
of the Reorganization, each outstanding share of Aspen's common stock (the
"Aspen Common Stock") will be converted into the right to receive that number of
shares of Zions common stock (the "Zions Common Stock") calculated by dividing
the Purchase Price (as defined herein) representing $73,000,000 plus certain
accretions, by the Average Closing Price (as defined herein) of Zions Common
Stock, and by further dividing that number by the sum of the number of issued
and outstanding shares of Aspen Common Stock at the effective date of the
Reorganization and the Option Equivalent Number (as defined herein).
On April 10, 1997, the closing price of Zions Common Stock was $115 3/8
per share and Aspen had issued and outstanding 3,720,780 shares of its Common
Stock. The Daily Sales Price (as defined herein) has been in excess of the
$93.00 ceiling to the Average Closing Price established in the Plan of
Reorganization since November 20, 1996. The Plan of Reorganization provides a
mechanism under such circumstances whereby the parties might act sequentially to
cause the Average Closing Price to be in excess of $93.00, despite the $93.00
ceiling, which would reduce the number of shares of Zions Common Stock to be
issued to holders of Aspen Common Stock. In accordance with the Plan of
Reorganization, the Average Closing Price can be higher than $93.00, and as a
result the fraction of a share of Zions Common Stock to be received for each
share of Aspen Common Stock will be smaller, in the event that Zions is entitled
to and determines to provide notice to Aspen of the intention of Zions to
terminate the Plan of Reorganization by reason of the price appreciation of
Zions Common Stock having met certain criteria set forth in the Plan of
Reorganization and thereafter Aspen exercises the Company Election (as defined
herein) (or, in the reverse situation, lower than the $83.00 floor if Aspen is
entitled to and determines to provide notice to Zions of the intention of Aspen
to terminate the Plan of Reorganization by reason of the price decline of Zions
Common Stock having met certain criteria
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set forth in the Plan of Reorganization and thereafter Zions exercises the Zions
Election (as defined herein)). See "Summary -- Certain Definitions -- Company
Election" and "-- Zions Election" and "Plan of Reorganization -- Authorized
Termination and Damages for Breach."
On April 10, 1997, the appreciation in the price of Zions Common Stock
since November 19, 1996 has exceeded that of the KBW 50 Index (as defined
herein) by more than 15 percentage points. If during the Pricing Period (as
defined herein) the average of the Daily Sales Prices of Zions Common Stock is
higher than $93.00 and the appreciation in the price of Zions Common Stock since
November 19, 1996 exceeds that of the KBW 50 Index by more than 15 percentage
points, these factors would enable Zions to provide notice to Aspen of the
intention of Zions to terminate the Plan of Reorganization and, hence, enable
Aspen to exercise the Company Election. Assuming that Zions was entitled to and
determined to provide notice to Aspen of the intention of Zions to terminate the
Plan of Reorganization by reason of these price appreciation factors having met
the criteria set forth in the Plan of Reorganization, and thereafter Aspen
exercised the Company Election, if the Reorganization had been consummated as of
April 10, 1997, the Average Closing Price after exercise of the Company Election
would have been $100.64. The parties have assumed for the purpose of the
calculation that follows that the Average Closing Price was equal to the closing
price of Zions on the NASDAQ-NMS (as defined below) on April 10, 1997. Assuming
that the Purchase Price equalled $73,968,000 on April 10, 1997, shareholders of
Aspen under such circumstances would have received .190232 shares of Zions
Common Stock for each share of Aspen Common Stock or an equivalent consideration
to holders of Aspen Common Stock of $21.95 per share.
Since there can be no assurance that Zions will provide notice to Aspen
of Zions' intention to terminate the Plan of Reorganization, even if it is
entitled to do so, and that Aspen upon receipt of any such notice will exercise
the Company Election, in each case if permitted by the Plan of Reorganization,
it is possible under such circumstances that the Average Closing Price could be
$93.00. Assuming under such circumstances that the Purchase Price equalled
$73,968,000 on April 10, 1997, the Reorganization had been consummated as of
that date, and the Average Closing Price of Zions Common Stock had been $93.00,
shareholders of Aspen would have received .205859 shares of Zions Common Stock
for each share of Aspen Common Stock or an equivalent consideration to holders
of Aspen Common Stock of $23.75 per share.
The Zions Common Stock to be distributed to Aspen shareholders will be
registered with the Securities and Exchange Commission and for all shareholders,
other than shareholders who are affiliates of Aspen or who become affiliates of
Zions, will be immediately tradable. See "Plan of Reorganization--Conversion of
Aspen Shares." Zions has filed this Proxy Statement/Prospectus with the
Securities and Exchange Commission as part of a Registration Statement under the
Securities Act of 1933, as amended, with respect to the shares of Zions Common
Stock which may be issued in the Reorganization to the shareholders of Aspen.
This Proxy Statement/Prospectus also constitutes the prospectus of Zions filed
as part of the Registration Statement.
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FOR THE ACTION OF THE SHAREHOLDERS TO BE EFFECTIVE, HOLDERS OF A
MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF ASPEN MUST VOTE
IN FAVOR OF THE REORGANIZATION. ALL REGULATORY APPROVALS HAVE BEEN OBTAINED.
--------------------
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THE SHARES OF ZIONS COMMON STOCK TO BE ISSUED IN THE MERGER HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF ZIONS COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
No person has been authorized to give any information or to make any
representation not contained in this Proxy Statement/Prospectus, and, if given
or made, any such information or representation should not be relied upon as
having been authorized by Zions or Aspen. This Proxy Statement/Prospectus does
not constitute an offer or solicitation by any person in any state in which such
offer or solicitation is not authorized by the laws thereof or in which the
person making such offer or solicitation is not qualified to make the same.
Neither the delivery of this Proxy Statement/Prospectus at any time nor the
distribution of Zions Common Stock hereunder shall imply that the information
contained herein is correct as of any time subsequent to its date.
The information contained in this Proxy Statement/Prospectus with
respect to Zions has been supplied by Zions. The information contained in this
Proxy Statement/Prospectus with respect to Aspen has been supplied by Aspen.
Neither Zions nor Aspen warrants the accuracy or completeness of information
relating to the other.
The date of this Proxy Statement/Prospectus is March 31, 1997.
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AVAILABLE INFORMATION
Zions has filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933 (the "Securities Act") a Registration Statement
on Form S-4 (the "Registration Statement") covering the shares of Zions Common
Stock issuable in the Reorganization. As permitted by the rules and regulations
of the SEC, this Proxy Statement/Prospectus omits certain information, exhibits
and undertakings contained in the Registration Statement. The statements
contained in this Proxy Statement/Prospectus as to the contents of any contract
or other document filed as an exhibit to the Registration Statement are of
necessity brief descriptions and are not necessarily complete. Each such
statement is qualified in its entirety by reference to the copy of such contract
or document filed as an exhibit to the Registration Statement. The Registration
Statement and the exhibits thereto can be inspected at the public reference
facilities of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.,
and copies of such material can be obtained at prescribed rates by mail
addressed to the SEC, Public Reference Section, Washington, D.C. 20549.
Both Zions and Aspen are subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith file reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C.; Suite 4800, 1801 California Street, Denver,
Colorado; and 500 Key Bank Tower, Suite 500, 50 S. Main Street, Salt Lake City,
Utah. Copies of such material can also be obtained at prescribed rates by mail
addressed to the SEC, Public Reference Section, Washington, D.C. 20549. Both
Zions Common Stock and Aspen Common Stock are quoted on the NASDAQ National
Market System (hereinafter, the "NASDAQ-NMS"), and such reports, proxy
statements and other information regarding each company can also be inspected at
the offices of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. The SEC
maintains a Web site that contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
SEC (http://www.sec.gov).
This Proxy Statement/Prospectus incorporates by reference certain
documents relating to Zions and Aspen which are not presented herein or
delivered herewith, including the Plan of Reorganization (as described herein).
See "Information Concerning Zions -- Zions Documents Incorporated by Reference"
and "Information Concerning Aspen -- Aspen Documents Incorporated by Reference."
Copies of such documents are available upon request and without charge to any
person to whom this Proxy Statement/Prospectus has been delivered. Requests for
the Plan of Reorganization or Zions documents should be directed to Zions
Bancorporation, One South Main Street, Suite 1380, Salt Lake City, Utah 84133,
Attention: Dale M. Gibbons, Senior Vice President, (telephone: 801-524-4787).
Requests for Aspen documents should be directed to Aspen Bancshares, Inc., 534
East Hyman Avenue, P.O. Box 3677, Aspen, Colorado 81612, Attention: Amy G.
Beidleman, Vice President, Chief Financial Officer and Secretary (telephone:
970-925-6700). In order to ensure timely delivery of the Plan of Reorganization
or Zions documents, any request should be made not later than May 9, 1997.
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SUMMARY
The following is a brief summary of certain information which may also
be contained elsewhere in this Proxy Statement/Prospectus. This summary is
provided for convenience and should not be considered complete. It is qualified
in its entirety by the more detailed information contained in this Proxy
Statement/Prospectus and in the Appendices hereto.
The Parties
Zions Bancorporation ("Zions") is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, and organized under the
laws of Utah, engaged primarily in the commercial banking business through its
banking subsidiaries. Zions' principal executive offices are at One South Main
Street, Suite 1380, Salt Lake City, Utah 84133 (telephone: 801-524-4787). Zions
is the second largest bank holding company headquartered in Utah. Zions First
National Bank, Salt Lake City, Utah ("Zions Bank"), founded in 1873, is a
wholly-owned subsidiary of Zions (except for directors' qualifying shares) and
as of December 31, 1996 had 99 offices located throughout the state of Utah,
plus one foreign office, for a total of 100 banking offices, including its Head
Office. Zions Bank is the second largest commercial banking organization
headquartered in the state of Utah. Zions also owns Nevada State Bank, Las
Vegas, Nevada, and National Bank of Arizona, Tucson, Arizona ("NBA"). Nevada
State Bank, with 25 offices in Nevada, is the fifth largest commercial bank in
Nevada. NBA currently has 17 offices in Arizona and is the fifth largest
commercial bank in Arizona. At December 31, 1996 Zions had total consolidated
assets of $6.49 billion, deposits of $4.55 billion, and shareholders' equity of
$507.5 million. See "Information Concerning Zions Bancorporation."
Aspen Bancshares, Inc. ("Aspen") is a bank holding company organized
under the laws of the State of Colorado and is registered under the Bank Holding
Company Act of 1956, as amended. Aspen is also a savings and loan holding
company pursuant to the Home Owners' Loan Act of 1933, as amended, as a result
of its acquisition of Centennial Savings Bank, F.S.B. ("Centennial"). Aspen's
principal executive offices are located at 534 East Hyman Avenue, Aspen,
Colorado 81612 and its telephone number is 970/925-6700. Aspen operates through
its subsidiaries, Pitkin County Bank and Trust Co. ("Pitkin"), a commercial bank
organized in 1979, Centennial, a thrift originally created in 1905 and acquired
by Aspen in 1993, and Val Cor Bancorporation, Inc. ("Val Cor"), a bank holding
company acquired by Aspen in June 1996, whose principal asset is Valley National
Bank of Cortez, Colorado ("Valley"), a commercial bank. Through its
subsidiaries, Aspen operates its commercial banking and thrift business through
12 offices/branches in western Colorado and one branch in northwestern New
Mexico. As of December 31, 1996, Aspen had total consolidated assets of $450.61
million, total deposits of $398.87 million, and shareholders' equity of $31.1
million.
The Special Meeting; Purpose
The Special Meeting of Shareholders of Aspen (the "Special Meeting")
will be held at 9:00 a.m. local time, on May 16, 1997 at Pitkin County Bank and
Trust Co., 534 East Hyman Avenue, Aspen, Colorado.
The purpose of the Special Meeting is to consider and vote upon a
proposal to approve the Plan of Reorganization. Only holders of record of Common
Stock,
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$.01 par value, of Aspen ("Aspen Common Stock") at the close of business on
April 16, 1997, the record date, will be entitled to vote at the Special
Meeting. At that date, 3,720,780 shares of Aspen Common Stock were outstanding,
each share being entitled to one vote. See "Introduction."
Vote Required for Approval
Approval of the Plan of Reorganization requires the affirmative vote of
a majority of the outstanding shares of Aspen Common Stock voting in person or
by proxy. A failure to vote, an abstention, or a failure by a broker to vote
shares held in street name will have the same legal effect as a vote against
approval of the Plan of Reorganization. See "Plan of Reorganization--Required
Vote; Management Recommendation."
As of March 31, 1997, the directors and executive officers of Aspen
beneficially owned an aggregate of approximately 21.25% of the outstanding Aspen
Common Stock. As an inducement to Zions to enter into the Plan of
Reorganization, all of the directors of Aspen have entered into agreements with
Zions under which they have agreed, in their capacity as shareholders, to vote
their shares in favor of the Reorganization. These agreements cover an aggregate
of approximately 25.5% of the outstanding Aspen Common Stock. See "Plan of
Reorganization--Voting Agreements." Zions owns 50,000 shares of Aspen Common
Stock, approximately 1.3% of the issued and outstanding shares of Aspen. Zions
purchased these shares in a series of market transactions during January 1997.
Zions will vote these shares in favor of the Plan of Reorganization.
Opinion of Aspen's Financial Advisor
Aspen has retained an independent financial advisor to evaluate the
merger consideration offered to Aspen shareholders by Zions. The financial
advisor has rendered an opinion that the merger consideration to be paid
pursuant to the Plan of Reorganization is fair to the shareholders of Aspen from
a financial point of view. See "Plan of Reorganization--Opinion of Aspen's
Financial Advisor."
Proposed Reorganization
At the Special Meeting, the shareholders of Aspen will be asked to
consider and approve an Agreement and Plan of Reorganization between Zions and
Aspen and an Agreement of Merger between Aspen and Zions (collectively, the
"Plan of Reorganization"). The Plan of Reorganization provides for the merger of
Aspen into Zions, whereby Zions will be the surviving corporation. See "Plan of
Reorganization." Upon consummation of the Reorganization, holders of Aspen
Common Stock will be entitled to receive, in exchange for each share of Aspen
Common Stock, that number of shares of Common Stock, no par value, of Zions
("Zions Common Stock") calculated by dividing the Purchase Price (as defined
below) by the Average Closing Price (as defined below) of Zions Common Stock,
and by further dividing the number so reached by the sum of the total number of
outstanding shares of Aspen Common Stock and the Option Equivalent Number (as
defined below).
On April 10, 1997, the closing price of Zions Common Stock was $115 3/8
per share and Aspen had issued and outstanding 3,720,780 shares of its Common
Stock. The Daily Sales Price (as defined herein) has been in excess of the
$93.00 ceiling to the Average Closing Price established in the Plan of
Reorganization
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since November 20, 1996. The Plan of Reorganization provides a mechanism under
such circumstances whereby the parties might act sequentially to cause the
Average Closing Price to be in excess of $93.00, despite the $93.00 ceiling,
which would reduce the number of shares of Zions Common Stock to be issued to
holders of Aspen Common Stock. In accordance with the Plan of Reorganization,
the Average Closing Price can be higher than $93.00, and as a result the
fraction of a share of Zions Common Stock to be received for each share of Aspen
Common Stock will be smaller, in the event that Zions is entitled to and
determines to provide notice to Aspen of the intention of Zions to terminate the
Plan of Reorganization by reason of the price appreciation of Zions Common Stock
having met certain criteria set forth in the Plan of Reorganization and
thereafter Aspen exercises the Company Election (as defined herein) (or, in the
reverse situation, lower than the $83.00 floor if Aspen is entitled to and
determines to provide notice to Zions of the intention of Aspen to terminate the
Plan of Reorganization by reason of the price decline of Zions Common Stock
having met certain criteria set forth in the Plan of Reorganization and
thereafter Zions exercises the Zions Election (as defined herein)). See "Summary
- -- Certain Definitions -- Company Election" and "-- Zions Election" and "Plan of
Reorganization -- Authorized Termination and Damages for Breach."
On April 10, 1997, the appreciation in the price of Zions Common Stock
since November 19, 1996 has exceeded that of the KBW 50 Index (as defined
herein) by more than 15 percentage points. If during the Pricing Period (as
defined herein) the average of the Daily Sales Prices of Zions Common Stock is
higher than $93.00 and the appreciation in the price of Zions Common Stock since
November 19, 1996 exceeds that of the KBW 50 Index by more than 15 percentage
points, these factors would enable Zions to provide notice to Aspen of the
intention of Zions to terminate the Plan of Reorganization and, hence, enable
Aspen to exercise the Company Election. Assuming that Zions was entitled to and
determined to provide notice to Aspen of the intention of Zions to terminate the
Plan of Reorganization by reason of these price appreciation factors having met
the criteria set forth in the Plan of Reorganization, and thereafter Aspen
exercised the Company Election, if the Reorganization had been consummated as of
April 10, 1997, the Average Closing Price after exercise of the Company Election
would have been $100.64. The parties have assumed for the purpose of the
calculation that follows that the Average Closing Price was equal to the closing
price of Zions on the NASDAQ-NMS on April 10, 1997. Assuming that the Purchase
Price equalled $73,968,000 on April 10, 1997, shareholders of Aspen under such
circumstances would have received .190232 shares of Zions Common Stock for each
share of Aspen Common Stock or an equivalent consideration to holders of Aspen
Common Stock of $21.95 per share.
Since there can be no assurance that Zions will provide notice to Aspen
of Zions' intention to terminate the Plan of Reorganization, even if it is
entitled to do so, and that Aspen upon receipt of any such notice will exercise
the Company Election, in each case if permitted by the Plan of Reorganization,
it is possible under such circumstances that the Average Closing Price could be
$93.00. Assuming under such circumstances that the Purchase Price equalled
$73,968,000 on April 10, 1997, the Reorganization had been consummated as of
that date, and the Average Closing Price of Zions Common Stock had been $93.00,
shareholders of Aspen would have received .205859 shares of Zions Common Stock
for each share of Aspen Common Stock or an equivalent consideration to holders
of Aspen Common Stock of $23.75 per share.
Fractional shares of Zions Common Stock will not be issued in the
Reorganization. Aspen shareholders otherwise entitled to a fractional share
will
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be paid the value of such fraction in cash as described herein under "Plan of
Reorganization -- Conversion of Aspen Shares -- Payment for Fractional Shares."
Because the market price of the shares of Zions Common Stock is subject
to fluctuation, the per share stock distribution may change before the
Reorganization. See "Plan of Reorganization." Aspen shareholders are encouraged
to obtain current market quotations for Zions Common Stock and Aspen Common
Stock and to consider the interplay between the quotations and the definitions
of "Average Closing Price," "Company Election," and "Zions Election." See
"Certain Definitions" above. No assurance can be given as to the market price of
Zions Common Stock or Aspen Common Stock at, or in the case of Zions Common
Stock after, the Effective Date.
Certain Definitions
In connection with the description of the Reorganization in this Proxy
Statement/Prospectus, shareholders of Aspen should be aware of the following
terms. The following definitions may not be complete. For a complete definition
of each term, please refer to the Plan of Reorganization.
"Average Closing Price" means the average (rounded to the nearest
penny) of each Daily Sales Price of Zions Common Stock over the Pricing Period,
except that, subject to the Company Election (as defined herein) and Zions
Election (as defined herein), (A) if the average (rounded to the nearest penny)
of each Daily Sales Price over the Pricing Period is less than $83.00, then the
Average Closing Price shall be $83.00 and (B) if the average (rounded to the
nearest penny) of each Daily Sales Price over the Pricing Period is more than
$93.00, then the Average Closing Price shall be $93.00.
"Company Closing Price" means the average (rounded to the nearest
penny) of the mean (unrounded) of the closing bid and asked prices of Aspen
Common Stock over the Pricing Period in the over-the-counter market as such
prices are reported by the automated quotation system of the National
Association of Securities Dealers, Inc., or in the absence thereof by such other
source upon which Zions and Aspen shall mutually agree.
"Company Election" means the election of Aspen in its sole discretion,
made following a decision by Zions to deliver to Aspen a notice of intent to
terminate the Plan of Reorganization where the average price of Zions Common
Stock during the Pricing Period was more than $93.00 and the increase in the
price of Zions Common Stock between November 19, 1996 and the Pricing Period
(using the average over such Pricing Period) exceeded the increase in the KBW 50
Index of Keefe, Bruyette & Woods, Inc. (the "KBW Index") by more than fifteen
percentage points, that the Plan of Reorganization shall not be terminated but
that the Average Closing Price shall be the lesser of (A) the average (rounded
to the nearest penny) of each Daily Sales Price over the Pricing Period, or (B)
a number of dollars and cents, rounded to the nearest penny, computed by
escalating $93.00 by a percentage comprising the difference between (I) the
number of percentage points representing the difference between the percentage
by which the average Daily Sales Price over the Pricing Period exceeds $90.25
and the percentage by which the average of the KBW Index over the Pricing Period
exceeds 344.75 and (II) 15 percentage points.
"Daily Sales Price" means for any trading day, the last reported sale
price or, if no such reported sale takes place, the mean (unrounded) of the
closing bid and asked prices of Zions Common Stock in the over-the-counter
market as such
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prices are reported by the automated quotation system of the National
Association of Securities Dealers, Inc. or, in the absence thereof, by such
other source upon which Zions and Aspen shall mutually agree.
"Effective Date" means the date which is the latest of (a) the date
following the day upon which the Aspen shareholders approve, ratify, and confirm
the transactions contemplated by the Plan of Reorganization; (b) the first to
occur of (i) the date thirty days following the date on which the Board of
Governors of the Federal Reserve System or the Federal Reserve Bank of San
Francisco acting pursuant to delegated authority (collectively, the "Board of
Governors") authorizes consummation of the merger of Aspen into Zions; or (ii)
if, pursuant to section 321(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (the "Riegle Act"), the Board of Governors
shall have prescribed a shorter period of time with the concurrence of the
Attorney General of the United States, the date on which such shorter period of
time shall elapse; (c) if such an order shall be required by law, the date ten
days following the date of the order of the Commissioner of Financial
Institutions of the State of Utah (the "Commissioner") approving the
transactions contemplated by the Plan of Reorganization; (d) the date ten days
following the date upon which the Colorado Division of Banking (the "Division")
approves the Reorganization; (e) the date upon which any other material order,
approval, or consent of a federal or state regulator of financial institutions
or financial institution holding companies authorizing consummation of the
transactions contemplated by the Plan of Reorganization is obtained or any
waiting period mandated by such order, approval, or consent has run; (f) ten
days after any stay of the approvals of the Board of Governors, the
Commissioner, or the Division of the transactions contemplated by the Plan of
Reorganization, or any injunction against closing of such transactions is
lifted, discharged, or dismissed; or (i) such other date as shall be mutually
agreed upon by Zions and Aspen.
"KBW Index" means the KBW 50 Index of Keefe, Bruyette & Woods, Inc. On
November 19, 1996, the KBW Index was 344.75. On April 10, 1997, the KBW Index
was 360.69 and had increased by 4.62 percent since November 19, 1996. During
that period the price of Zions Common stock increased by 27.84 percent. See
"Certain Definitions -- Company Election" and "Certain Definitions -- Zions
Election."
"Option Equivalent Number" means the number reached by summing the
following values as calculated for each option to purchase one share of Aspen
Common Stock which is outstanding and unexercised at the Effective Date: (A) the
difference between the Company Closing Price and the exercise price of that
option (or, if a greater number, zero) divided by (B) the Company Closing Price.
"Pricing Period" means the twenty consecutive trading days ending on
and including the fifth trading day preceding the Effective Date.
"Purchase Price" means the sum of (i) $73,000,000; and (ii) the
consolidated net undistributed income of Aspen during the period beginning on
July 1, 1996 and ending on the close of business on the last day of the calendar
month preceding the Effective Date, calculated in accordance with generally
accepted accounting principles in a manner consistent with Aspen Financial
Statements (the amount calculated under this subclause (ii) may be a negative
number; the effect of summing such a negative number would be a reduction in the
Purchase Price as otherwise would be calculated); (iii) if the Effective Date
does not occur on the first day of a calendar month, an amount calculated by
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computing the daily average of the net undistributed income of Aspen for the
period and in the manner prescribed in subclause (ii) and multiplying the result
of such computation by the number of days elapsing during the period beginning
on the first day of the month in which the Effective Date occurs and ending on
the day immediately preceding the Effective Date; and (iv) the aggregate
contributions to capital of Aspen resulting from the exercise of stock options
after June 30, 1996.
"Zions Election" means the election of Zions in its sole discretion,
made following a decision by Aspen to deliver to Zions a notice of intent to
terminate the Plan of Reorganization where the average price of Zions Common
Stock during the Pricing Period was less than $83.00 and the decrease in the
price of Zions Common Stock between November 19, 1996 and the Pricing Period
(using the average over such Pricing Period) exceeded the decrease in the KBW
Index by more than fifteen percentage points, that the Plan of Reorganization
shall not be terminated but that the Average Closing Price shall be the greater
of (A) the average (rounded to the nearest penny) of each Daily Sales Price over
the Pricing Period, or (B) a number of dollars and cents, rounded to the nearest
penny, computed by deflating $83.00 by a percentage comprising the difference
between (I) the number of percentage points representing the difference between
the percentage by which the average Daily Sales Price over the Pricing Period is
less than $90.25 and the percentage by which the average of the KBW Index over
the Pricing Period is less than 344.75 and (II) 15 percentage points.
Reasons for the Reorganization
Management and the directors of Aspen believe that it is in the best
interest of Aspen and its shareholders for Aspen to merge with a larger
financial institution in a tax-free reorganization. Management and the directors
of Aspen believe that the proposed merger with Zions in a stock-for-stock
exchange provides Aspen's shareholders with the greatest available monetary
value based upon Zions' offer as compared to other offers received as well as
increased liquidity for their investment, prospects for greater yield of their
investment through increased dividends and prospects for growth in their
investment due to the prospects for Zions generally. In addition, management and
the directors of Aspen believe the combined institution will be more competitive
in Aspen's market area due to Zions' greater resources. Management and the
directors of Aspen have received an opinion of The Wallach Company ("Wallach")
of Denver, Colorado, that the Reorganization is fair to Aspen's shareholders
from a financial point of view. See "Plan of Reorganization--Background of and
Reasons for the Reorganization" for a description of the factors considered by
Aspen's board of directors in determining to recommend the Reorganization to
shareholders for their approval. Aspen's board of directors believes that the
merger with Zions will realize substantial value for Aspen's shareholders and
provides them the option of realizing a significant return on their original
investment and continuing to participate in the development of banking in
Colorado and New Mexico by holding the Zions Common Stock they will receive in
the Reorganization.
For Zions, the Reorganization will provide the opportunity to extend
its franchise to the western Colorado and northwestern New Mexico markets,
within which Zions currently has no presence, by broadening its geographical
base to the western Colorado and northwestern New Mexico markets and thereby
diversifying its banking operations, and by expanding the banking services it is
able to provide. The combination of the different skills, resources and services
offered by Aspen and Zions, together with the additional skills and resources
available in the
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<PAGE>
broader Zions organization, will make the resulting banking group better able to
effectively compete in its markets with other full-service financial
institutions. See "Plan of Reorganization--Background of and Reasons for the
Reorganization--Zions."
Board of Directors Recommendation
The Board of Directors of Aspen unanimously believes that the
Reorganization is in the best interests of the shareholders, employees, and
customers of Aspen and recommends that the shareholders of Aspen vote "FOR"
approval of the Plan of Reorganization. Aspen has retained Wallach, an
independent financial advisor, to render an opinion regarding the fairness to
the Aspen shareholders of the consideration provided in the Plan of
Reorganization. Wallach has opined that the merger consideration to be paid to
the shareholders of Aspen by Zions is fair to the shareholders of Aspen from a
financial point of view.
SHAREHOLDERS OF ASPEN ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
Interests of Certain Persons in the Transaction
The Plan of Reorganization provides that, following the Reorganization,
Mr. Charles B. Israel, currently president and chief executive officer of Aspen
and Pitkin, a bank organized under the laws of Colorado and a wholly-owned
subsidiary of Aspen, will remain as chief executive officer and member of the
board of directors of Pitkin. Mr. Israel will enter into the two-year employment
agreement with Zions effective as of the Effective Date. See "Plan of
Reorganization--Interests of Certain Persons in the Transaction."
Tax Consequences
Aspen will receive an opinion from Rothgerber, Appel, Powers & Johnson
LLP, legal counsel to Aspen (the "Rothgerber Opinion") that, based upon the
facts and representations set forth or referred to in such opinion, the merger
of Aspen with and into Zions (the "Merger") will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code. As a result, the Aspen shareholders will recognize no gain or loss upon
the exchange of their shares of Aspen Common Stock for Zions Common Stock in the
Merger, except with respect to cash received in lieu of fractional shares. For
further discussion, see "Federal Income Tax Consequences of the Reorganization."
A copy of the Rothgerber Opinion is attached to this Proxy Statement/Prospectus
in Appendix B.
No Dissenters' Rights
Under Colorado law, no shareholders of Aspen will be entitled to
dissenters' rights. The Colorado Business Corporation Act (Colorado Revised
Statutes, Title 7, Section 7-113-101 et seq.) does not permit a shareholder to
dissent to a merger in the case of a merger, consummation of which requires the
approval of shareholders under Colorado law, with respect to shares which were
listed on the NASDAQ-NMS at the time of the record date for such shareholder
approval and where the shareholder is to receive shares of the corporation
surviving the
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<PAGE>
merger in exchange for his shares (and cash in lieu of fractional shares). See
"Comparison of Zions Common Stock and Aspen Common Stock--Dissenters' Rights."
Conditions; Regulatory Approval
Consummation of the Reorganization is subject to satisfaction of a
number of conditions, including (i) obtaining requisite approval from Aspen
shareholders, (ii) obtaining regulatory approvals from the Board of Governors of
the Federal Reserve System, the Commissioner of Financial Institutions of Utah,
and the Colorado Division of Banking, (iii) the receipt of an opinion of counsel
with respect to certain tax aspects of the Reorganization, (iv) the absence of
any material adverse change with respect to Aspen, and (v) the satisfaction of
other customary closing conditions. See "Plan of Reorganization--Conditions to
the Reorganization." All regulatory approvals have been obtained.
Amendment; Termination
Notwithstanding prior shareholder approval, the Plan of Reorganization
may be amended at any time prior to the Effective Date of the Reorganization in
any respect that would not prejudice the economic interests of the Aspen
shareholders.
The Plan of Reorganization may be terminated and abandoned at any time
prior to the Effective Date, notwithstanding approval of the shareholders, as
follows: (i) by mutual consent of Zions and Aspen; (ii) unilaterally, by either
party if any of the representations and warranties of the other party was
materially incorrect when made; (iii) by either party in the event of a material
breach or material failure by the other party to the Plan of Reorganization of
any covenant or agreement contained in the Plan of Reorganization which has not
been, or cannot be, cured within thirty days after written notice has been
given; (iv) by the board of directors of Zions, upon written notice given to
Aspen if (a) the average (rounded to the nearest penny) of each Daily Sales
Price over the Pricing Period is more than $93.00, and (b) the percentage
increase in the Daily Sales Price between November 19, 1996 and the Pricing
Period (using the average over such Pricing Period) is more than fifteen
percentage points more than the percentage increase in the KBW Index between
November 19, 1996 and the Pricing Period (using the average over such Pricing
Period), and (c) Zions shall have provided to Aspen before the close of business
on the fourth trading day preceding the Effective Date a written notice styled
"Notice of Intent To Terminate Based Upon Index Differential," and (d) Aspen
shall not thereafter have provided written notice to Zions, before the close of
business on the third trading day preceding the Effective Date, that Aspen
desires to exercise the Company Election; (v) by the board of directors of
Aspen, upon written notice given to Zions, if (a) the average (rounded to the
nearest penny) of each Daily Sales Price over the Pricing Period is less than
$83.00, and (b) the percentage decrease in the Daily Sales Price between
November 19, 1996 and the Pricing Period (using the average over such Pricing
Period) is more than fifteen percentage points more than the percentage decrease
in the KBW Index between November 19, 1996 and the Pricing Period (using the
average over such Pricing Period), and (c) Aspen shall have provided to Zions
before the close of business on the fourth trading day preceding the Effective
Date a written notice styled "Notice of Intent To Terminate Based Upon Index
Differential," and (d) Zions shall not thereafter have provided written notice
to Aspen, before the close of business on the third trading day preceding the
Effective Date, that Zions desires to exercise the Zions Election; (vi) by
either party if the
- 8 -
<PAGE>
Reorganization has become inadvisable or impracticable by reason of federal or
state litigation to restrain or invalidate the Reorganization; or (vii) by
either party on or after September 30, 1997, if the Effective Date has not
occurred on or before that date.
Effective Date of the Reorganization
It is presently anticipated that if the Plan of Reorganization is
approved by the shareholders of Aspen, the Reorganization will become effective
in the second quarter of 1997. However, there can be no assurance that all
conditions necessary to the consummation of the Reorganization will be satisfied
or, if satisfied, that they will be satisfied in time to permit the
Reorganization to become effective at the anticipated time. See "Plan of
Reorganization--Effective Date of the Reorganization."
Accounting Treatment
It is intended that the Reorganization will be accounted for as a
purchase under generally accepted accounting principles ("GAAP"). See "Plan of
Reorganization--Accounting Treatment."
Comparison of Shareholders' Rights
See "Comparison of Zions Common Stock and Aspen Common Stock" for a
summary of the material differences between the rights of holders of shares of
Aspen Common Stock and holders of shares of Zions Common Stock.
"Anti-Takeover" Provisions
The Articles of Incorporation and Bylaws of Zions contain provisions
which may be considered to be anti-takeover in nature, including staggered terms
of office for directors, absence of cumulative voting and special shareholder
vote requirements for certain types of extraordinary corporate transactions.
Additionally, Zions has adopted a shareholders' rights plan which will have the
effect of encouraging entities interested in acquiring Zions to negotiate any
such transactions with Zions' management and of deterring or discouraging
unfriendly takeovers by making any such takeover substantially more expensive to
the entity sponsoring the unfriendly takeover. See "Comparison of Zions Common
Stock and Aspen Common Stock."
Exchange of Certificates
Instructions on how to effect the exchange of Aspen Common Stock
certificates for Zions Common Stock certificates will be sent, as promptly as
practicable after the Reorganization becomes effective, to each shareholder of
record of Aspen. Shareholders should not send in stock certificates until they
receive written instructions to do so.
Trading Markets; Pre-Announcement Prices
The outstanding shares of Zions Common Stock currently are traded on
the National Market System of NASDAQ ("NASDAQ-NMS") under the symbol "ZION." The
shares of Zions Common Stock to be issued in the Reorganization will be listed
on NASDAQ-NMS, subject to official notice of issuance. The closing sale price
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<PAGE>
for Zions Common Stock on the NASDAQ-NMS on November 18, 1996, the last trading
day prior to the first public announcement of the Reorganization, was $89.00.
On April 10, 1997, the closing price of Zions Common Stock was $115 3/8
per share and Aspen had issued and outstanding 3,720,780 shares of its Common
Stock. The Daily Sales Price (as defined herein) has been in excess of the
$93.00 ceiling to the Average Closing Price established in the Plan of
Reorganization since November 20, 1996. The Plan of Reorganization provides a
mechanism under such circumstances whereby the parties might act sequentially to
cause the Average Closing Price to be in excess of $93.00, despite the $93.00
ceiling, which would reduce the number of shares of Zions Common Stock to be
issued to holders of Aspen Common Stock. In accordance with the Plan of
Reorganization, the Average Closing Price can be higher than $93.00, and as a
result the fraction of a share of Zions Common Stock to be received for each
share of Aspen Common Stock will be smaller, in the event that Zions is entitled
to and determines to provide notice to Aspen of the intention of Zions to
terminate the Plan of Reorganization by reason of the price appreciation of
Zions Common Stock having met certain criteria set forth in the Plan of
Reorganization and thereafter Aspen exercises the Company Election (or, in the
reverse situation, lower than the $83.00 floor if Aspen is entitled to and
determines to provide notice to Zions of the intention of Aspen to terminate the
Plan of Reorganization by reason of the price decline of Zions Common Stock
having met certain criteria set forth in the Plan of Reorganization and
thereafter Zions exercises the Zions Election). See "Summary -- Certain
Definitions -- Company Election" and "-- Zions Election" and "Plan of
Reorganization -- Authorized Termination and Damages for Breach."
On April 10, 1997, the appreciation in the price of Zions Common Stock
since November 19, 1996 has exceeded that of the KBW 50 Index (as defined
herein) by more than 15 percentage points. If during the Pricing Period (as
defined herein) the average of the Daily Sales Prices of Zions Common Stock is
higher than $93.00 and the appreciation in the price of Zions Common Stock since
November 19, 1996 exceeds that of the KBW 50 Index by more than 15 percentage
points, these factors would enable Zions to provide notice to Aspen of the
intention of Zions to terminate the Plan of Reorganization and, hence, enable
Aspen to exercise the Company Election. Assuming that Zions was entitled to and
determined to provide notice to Aspen of the intention of Zions to terminate the
Plan of Reorganization by reason of these price appreciation factors having met
the criteria set forth in the Plan of Reorganization, and thereafter Aspen
exercised the Company Election, if the Reorganization had been consummated as of
April 10, 1997, the Average Closing Price after exercise of the Company Election
would have been $100.64. The parties have assumed for the purpose of the
calculation that follows that the Average Closing Price was equal to the closing
price of Zions on the NASDAQ-NMS on April 10, 1997. Assuming that the Purchase
Price equalled $73,968,000 on April 10, 1997, shareholders of Aspen under such
circumstances would have received .190232 shares of Zions Common Stock for each
share of Aspen Common Stock or an equivalent consideration to holders of Aspen
Common Stock of $21.95 per share.
Since there can be no assurance that Zions will provide notice to Aspen
of Zions' intention to terminate the Plan of Reorganization, even if it is
entitled to do so, and that Aspen upon receipt of any such notice will exercise
the Company Election, in each case if permitted by the Plan of Reorganization,
it is possible under such circumstances that the Average Closing Price could be
$93.00. Assuming under such circumstances that the Purchase Price equalled
$73,968,000 on April 10, 1997, the Reorganization had been consummated as of
that date, and the Average Closing Price of Zions Common Stock had been $93.00,
shareholders of
- 10 -
<PAGE>
Aspen would have received .205859 shares of Zions Common Stock for each share
of Aspen Common Stock or an equivalent consideration to holders of Aspen Common
Stock of $23.75 per share.
The outstanding shares of Aspen Common Stock currently are traded on
NASDAQ-NMS under the symbol "ASBK." The closing sale price for Aspen Common
Stock on the NASDAQ-NMS on November 18, 1996, the last trading day prior to the
first public announcement of the Reorganization, was $18.75. On April 11, 1997,
the last trading date prior to the printing of this Proxy Statement/Prospectus,
the closing sale price for Aspen Common Stock was $21.00. See "Stock Prices and
Dividends on Aspen Common Stock," below.
Selected Financial Information
The following table sets forth certain historical financial information
for Zions and Aspen. With respect to pro forma combined financial information
for Zions giving effect to the Reorganization using the purchase method of
accounting, see "Information Concerning the Pro Forma Combined Financial Data."
This information is based on the respective historical financial statements of
Zions and Aspen incorporated herein by reference and should be read in
conjunction with such statements and information and the related notes.
- 11 -
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Zions
Earnings
Net interest income........... $ 260,473 $ 227,094 $ 198,606 $ 174,657 $ 157,282
Provision for loan losses..... 3,540 2,800 2,181 2,993 10,929
Net income.................... 101,350 81,328 63,827 58,205 47,209
Per Share
Net income ................... $ 6.84 $ 5.53 $ 4.37 $ 4.08 $ 3.42
Cash Dividends................ 1.70 1.41 1.16 .98 .75
Statement of Condition at Period
End
Assets........................ $6,484,964 $5,620,646 $4,934,095 $4,801,054 $4,107,924
Deposits...................... 4,552,017 4,097,114 3,705,976 3,432,289 3,075,110
Long-term debt................ 251,620 56,229 58,182 59,587 99,223
Shareholders' equity.......... 507,452 428,506 365,770 312,592 260,070
Aspen
Earnings
Net interest income........... $ 17,330 $ 15,594 $ 14,027 $ 8,280 $ 5,182
Provision for loan losses..... 145 36 56 835 503
Net income.................... 4,086 4,683 4,048 2,565 1,747
Per Share
Net income (fully diluted).... $ 1.07 $ 1.25 $ 1.08 $ .80 $ .59
Cash Dividends................ .20 .20 .16 .16 .13
Statement of Condition at Period
End
Assets........................ $ 450,606 $ 349,123 $ 349,563 $ 324,539 $ 142,262
Deposits...................... 398,874 300,017 283,557 284,022 121,331
Long-term debt................ 15,975 16,285 17,636 8,400 5,400
Shareholders' equity.......... 31,101 27,298 22,335 21,358 12,782
</TABLE>
Comparative Per Share Data
The following table sets forth for the periods indicated historical
earnings, book values and dividends per share for Zions and Aspen Common Stock.
The following data are based on the respective historical financial statements
of Zions and Aspen incorporated herein by reference and should be read in
conjunction with such financial statements and such information and the related
notes to each.
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<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Income Per Common Share
Zions........................ $ 6.84 $ 5.53 $ 4.37 $ 4.08 $ 3.42
Aspen (fully diluted)........ 1.07 1.25 1.08 .80 .59
Book Value Per Common Share
Zions........................ $34.45 $29.44 $25.12 $22.01 $18.95
Aspen........................ 8.36 7.00 5.36 5.01 4.30
Cash Dividends Declared Per Common
Share
Zions (1).................... $ 1.70 $ 1.41 $ 1.16 $ .98 $ .75
Aspen........................ .20 .20 .16 .16 .13
</TABLE>
(1) While Zions is not obligated to pay cash dividends, the Board of
Directors presently intends to continue its policy of paying quarterly
cash dividends. Future dividends will depend, in part, upon the
earnings and financial condition of Zions.
Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information reflects
the application of the purchase method of accounting. The following tables,
which show comparative historical per Common Share data for Zions and Aspen
(separately and pro forma combined) and equivalent pro forma per share data for
Aspen, should be read in conjunction with the financial information as
incorporated herein by reference to other documents. Two pro-forma equivalent
tables are presented: one to reflect the situation where Zions is entitled and
determines to provide notice to Aspen of Zions' intention to terminate the Plan
of Reorganization by reason of the price appreciation of Zions Common Stock
having met certain criteria and thereafter Aspen exercises the Company Election;
the second to reflect the situation where either Zions has chosen not to provide
notice of its intention to terminate the Plan of Reorganization or Zions does
not have the right to such notice, in each of which cases the Average Closing
Price would be deemed to be $93.00. The pro forma data in the table, presented
as of and for the year ended December 31, 1996, are presented for comparative
and illustrative purposes only and are not necessarily indicative of the
combined financial position or results of operations in the future or what the
combined financial position or results of operations would have been had the
Reorganization been consummated during the period or as of the date for which
the information in the table is presented:
- 13 -
<PAGE>
<TABLE>
<CAPTION>
Historical Pro Forma
------------------- -----------------------------------------------
Zions
and Aspen Aspen Aspen
Pro-Forma Equivalent Equivalent
Per Common Share Zions Aspen Combined(4) Pro-Forma(5) Pro-Forma(6)
- ---------------- ----- ----- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET INCOME (1)
For the year ended
December 31, 1996 $ 6.84 $ 1.07 $ 6.61 $1.26 $1.35
CASH DIVIDENDS(2)
For the year ended
December 31, 1996 $ 1.70 $ .20 $ 1.70 $ .32 $ .35
BOOK VALUE:(3)
As of December 31, 1996 $34.45 $ 8.36 $38.24 $7.27 $7.93
</TABLE>
- ----------------------
(1) Net Income per share is based on weighted average common and common
equivalent shares outstanding.
(2) Pro forma cash dividends represent historical cash dividends of Zions.
(3) Book value per common share is based on total period-end of Zions
shareholders' equity.
(4) Pro-forma combined net income per share represents historical net
income of Zions and Aspen adjusted for amortization of goodwill
resulting from purchase accounting computed using historical weighted
average common and common equivalent shares of Zions adjusted by
computed common and common equivalent shares to be issued in the
purchase. Pro-forma combined book value per share represents historical
total shareholders' equity of Zions adjusted by the purchase price less
expenses related to amortization of goodwill resulting from purchase
accounting computed using Zions' historical common shares outstanding
adjusted by computed common shares to be issued in the purchase.
(5) Assumes that Zions is entitled and has determined to provide notice to
Aspen of Zions' intention to terminate the Plan of Reorganization by
reason of the price appreciation of Zions Common Stock having met
certain criteria and thereafter Aspen has exercised the Company
Election. Pro-forma equivalent amounts are computed by multiplying the
pro-forma combined amounts by the estimated exchange ratio as of April
10, 1997 and assume a Purchase Price of $73,968,000, an Average Closing
Price of $100.64 as of April 10, 1997, and a resulting exchange ratio
of .190232 share of Zions Common Stock for each share of Aspen Common
Stock.
(6) Assumes that either Zions has chosen not to provide notice of its
intention to terminate the Plan of Reorganization or Zions does not
have the right to provide such notice. Pro-forma equivalent amounts are
computed by multiplying the pro-forma combined amounts by the estimated
exchange ratio as of April 10, 1997 and assume a Purchase Price of
$73,968,000, an Average Closing Price of $93.00 as of April 10, 1997,
and a resulting exchange ratio of .205859 share of Zions Common Stock
for each share of Aspen Common Stock.
Pro Forma Equivalent Stock Price Information
The following table sets forth (i) the closing price per share of Zions
Common Stock and the closing price per share of Aspen Common Stock on each of
(a) November 18, 1996, the last full trading day before the public announcement
of the signing of the Plan of Reorganization, and (b) April 10, 1997, the most
recent date for which it was practicable to obtain market price data prior to
the printing of this Proxy Statement/Prospectus, and (ii) the pro-forma
equivalent price per share of Aspen Common Stock determined as if the Effective
Date were five business days after such date. The pro-forma equivalent price per
share of Aspen Common Stock at each specified date represents the closing price
of a share
- 14 -
<PAGE>
of Zions Common Stock at such date multiplied by a fraction equal to the per
share stock distribution that would have existed if the Effective Date had been
five business days after such date.
Zions Aspen Pro-Forma Equivalent
Common Stock Common Stock Price Per Share of
Closing Price Closing Price Aspen Common Stock
------------- ------------- ------------------
November 18, 1996 $ 89.00 $18.75 $18.86
April 10, 1997 $115.38 $21.00 $21.95 (1)
(1) Assumes that Zions is entitled and has determined to provide notice to
Aspen of Zions' intention to terminate the Plan of Reorganization by
reason of the price appreciation of Zions Common Stock having met
certain criteria and thereafter Aspen has exercised the Company
Election. If either Zions has chosen not to provide notice of its
intention to terminate the Plan of Reorganization or Zions does not
have the right to provide such notice, the pro-forma equivalent price
per share of Aspen Common Stock would have been $23.75.
Because the market price of the shares of Zions Common Stock is subject
to fluctuation, the per share stock distribution may change before the
Reorganization. See "Plan of Reorganization." Aspen shareholders are encouraged
to obtain current market quotations for Zions Common Stock and Aspen Common
Stock and to consider the interplay between the quotations and the definitions
of "Average Closing Price," "Company Election," and "Zions Election." See
"Certain Definitions" above. No assurance can be given as to the market price of
Zions Common Stock or Aspen Common Stock at, or in the case of Zions Common
Stock after, the Effective Date.
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<PAGE>
ASPEN BANCSHARES, INC.
Proxy Statement
for
Special Meeting of Shareholders
of Aspen Bancshares, Inc.
to be held on
May 16, 1997
and
ZIONS BANCORPORATION
Prospectus
Up to 800,000 Shares of
Common Stock
INTRODUCTION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation by the Board of Directors of Aspen Bancshares, Inc. ("Aspen") of
proxies to be voted at the Special Meeting of Shareholders of Aspen to be held
on May 16, 1997 and at any postponements or adjournments thereof. The
Special Meeting will be held at 9:00 a.m., local time, at Pitkin County Bank and
Trust Co., 534 East Hyman Avenue, Aspen, Colorado. The approximate date on which
this Proxy Statement/Prospectus will first be mailed to the shareholders of
Aspen is April 18, 1997.
Record Date; Voting Rights
The Board of Directors of Aspen has fixed the close of business on
April 16, 1997 as the record date for determining the shareholders of Aspen
entitled to notice of and to vote at the Special Meeting or any postponements or
adjournments thereof. At that date, 3,720,780 shares of Common Stock, $.01 par
value, of Aspen ("Aspen Common Stock") were outstanding, held by approximately
238 shareholders of record. Each such share of Aspen Common Stock entitles its
holder of record at the close of business on the record date to one vote on each
matter properly submitted to the shareholders for action at the Special Meeting.
Aspen has no other outstanding class of capital stock. Zions owns 50,000 shares
of Aspen Common Stock. See "Plan of Reorganization -- Required Vote; Management
Recommendation" below.
Purpose of the Special Meeting
At the Special Meeting, the shareholders of Aspen will be asked to
consider and vote upon a proposal to approve an Agreement and Plan of
Reorganization dated as of November 19, 1996, as amended on March 11, 1997,
between Aspen and Zions Bancorporation ("Zions") and a related Agreement of
Merger between Aspen and Zions (these agreements are hereinafter referred to
collectively as the "Plan of Reorganization"). As more fully described below
under "Plan of Reorganization," the Plan of Reorganization provides for the
merger of Aspen into Zions with Zions being the surviving corporation. Upon the
Effective Date (as defined in "Summary" above), each holder of Aspen Common
Stock will be entitled to receive, in exchange for each share of Aspen Common
Stock held by him, that number of shares of Zions Common Stock calculated by
dividing the Purchase Price (as
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<PAGE>
defined in "Summary" above) of $73,000,000 plus certain accretions by the
Average Closing Price (as defined in "Summary" above) of Zions Common Stock, and
by further dividing the number so reached by the sum of the total number of
outstanding shares of Aspen Common Stock and the Option Equivalent Number (as
defined in "Summary" above).
On April 10, 1997, the closing price of Zions Common Stock was $115 3/8
per share and Aspen had issued and outstanding 3,720,780 shares of its Common
Stock. The Daily Sales Price (as defined herein) has been in excess of the
$93.00 ceiling to the Average Closing Price established in the Plan of
Reorganization since November 20, 1996. The Plan of Reorganization provides a
mechanism under such circumstances whereby the parties might act sequentially to
cause the Average Closing Price to be in excess of $93.00, despite the $93.00
ceiling, which would reduce the number of shares of Zions Common Stock to be
issued to holders of Aspen Common Stock. In accordance with the Plan of
Reorganization, the Average Closing Price can be higher than $93.00, and as a
result the fraction of a share of Zions Common Stock to be received for each
share of Aspen Common Stock will be smaller, in the event that Zions is entitled
to and determines to provide notice to Aspen of the intention of Zions to
terminate the Plan of Reorganization by reason of the price appreciation of
Zions Common Stock having met certain criteria set forth in the Plan of
Reorganization and thereafter Aspen exercises the Company Election (or, in the
reverse situation, lower than the $83.00 floor if Aspen is entitled to and
determines to provide notice to Zions of the intention of Aspen to terminate the
Plan of Reorganization by reason of the price decline of Zions Common Stock
having met certain criteria set forth in the Plan of Reorganization and
thereafter Zions exercises the Zions Election). See "Summary -- Certain
Definitions -- Company Election" and "-- Zions Election" and "Plan of
Reorganization -- Authorized Termination and Damages for Breach."
On April 10, 1997, the appreciation in the price of Zions Common Stock
since November 19, 1996 has exceeded that of the KBW 50 Index (as defined
herein) by more than 15 percentage points. If during the Pricing Period (as
defined herein) the average of the Daily Sales Prices of Zions Common Stock is
higher than $93.00 and the appreciation in the price of Zions Common Stock since
November 19, 1996 exceeds that of the KBW 50 Index by more than 15 percentage
points, these factors would enable Zions to provide notice to Aspen of the
intention of Zions to terminate the Plan of Reorganization and, hence, enable
Aspen to exercise the Company Election. Assuming that Zions was entitled to and
determined to provide notice to Aspen of the intention of Zions to terminate the
Plan of Reorganization by reason of these price appreciation factors having met
the criteria set forth in the Plan of Reorganization, and thereafter Aspen
exercised the Company Election, if the Reorganization had been consummated as of
April 10, 1997, the Average Closing Price after exercise of the Company Election
would have been $100.64. The parties have assumed for the purpose of the
calculation that follows that the Average Closing Price was equal to the closing
price of Zions on the NASDAQ-NMS on April 10, 1997. Assuming that the Purchase
Price equalled $73,968,000 on April 10, 1997, shareholders of Aspen under such
circumstances would have received .190232 shares of Zions Common Stock for each
share of Aspen Common Stock or an equivalent consideration to holders of Aspen
Common Stock of $21.95 per share.
Since there can be no assurance that Zions will provide notice to Aspen
of Zions' intention to terminate the Plan of Reorganization, even if it is
entitled to do so, and that Aspen upon receipt of any such notice will exercise
the Company Election, in each case if permitted by the Plan of Reorganization,
it is possible under such circumstances that the Average Closing Price could be
$93.00.
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Assuming under such circumstances that the Purchase Price equalled $73,968,000
on April 10, 1997, the Reorganization had been consummated as of that date, and
the Average Closing Price of Zions Common Stock had been $93.00, shareholders of
Aspen would have received .205859 shares of Zions Common Stock for each share of
Aspen Common Stock or an equivalent consideration to holders of Aspen Common
Stock of $23.75 per share.
Opinion of Aspen's Financial Advisor
In order to evaluate the merger consideration offered to Aspen
shareholders by Zions, Aspen retained the investment banking firm, Wallach,
which is unrelated to Aspen or Zions or any of their respective affiliates, to
render an opinion on the fairness of Zions' offer from a financial point of
view. Aspen has received an opinion from Wallach that the merger consideration
to be paid pursuant to the Plan of Reorganization is fair to the shareholders of
Aspen from a financial point of view. Aspen has also utilized the services of
Wallach to advise the Aspen board of directors with respect to the
Reorganization and to assist Aspen in negotiating the terms of the Plan of
Reorganization. The opinion of Wallach is attached as Appendix A to this Proxy
Statement/Prospectus and should be read in its entirety for information as to
the matters considered and assumptions made in rendering such opinion. See "Plan
of Reorganization--Opinion of Aspen's Financial Advisor."
THE BOARD OF DIRECTORS OF ASPEN UNANIMOUSLY BELIEVES THAT THE
REORGANIZATION IS IN THE BEST INTERESTS OF THE SHAREHOLDERS OF ASPEN AND
RECOMMENDS THAT ASPEN SHAREHOLDERS VOTE TO APPROVE THE PLAN OF REORGANIZATION.
Voting and Revocation of Proxies
All properly executed proxies not theretofore revoked will be voted at
the Special Meeting or any postponements or adjournments thereof in accordance
with the instructions thereon. Aspen proxies containing no voting instructions
will be voted in favor of approval of the Plan of Reorganization. As to any
other matter brought before the Special Meeting and submitted to a shareholder
vote, proxies will be voted in accordance with the judgment of the proxyholders
named thereon.
A shareholder who has executed and returned a proxy may revoke it at
any time before it is voted by filing with the Secretary of Aspen written notice
of such revocation or a later dated proxy or by attending the Special Meeting
and voting in person. Attendance at the Special Meeting will not, of itself,
constitute a revocation of a proxy.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees
of Aspen may solicit proxies from the shareholders of Aspen in person or by
telephone or otherwise for no additional compensation. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward proxy
soliciting materials to beneficial owners of shares held of record by them and
will be reimbursed for their reasonable expenses. Aspen will pay all expenses in
connection with the printing and solicitation of proxies for the Special
Meeting. Zions will pay for all costs attributable to registering the Zions
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Common Stock under applicable federal and state law. See "Plan of
Reorganization--Expenses."
PLAN OF REORGANIZATION
This section of the Proxy Statement/Prospectus describes certain
important aspects of the Plan of Reorganization. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Plan of Reorganization. The Plan of Reorganization has been filed with the SEC
as an exhibit to the Registration Statement. The Plan of Reorganization is
incorporated into this Proxy Statement/Prospectus by reference to such filing
and is available upon request to Dale M. Gibbons, Senior Vice President, Zions
Bancorporation. See "Available Information."
The Reorganization
The Plan of Reorganization provides for the merger of Aspen into Zions
with Zions being the surviving corporation. Zions is a bank holding company
incorporated in Utah. The principal subsidiaries of Zions are Zions First
National Bank with 99 offices located throughout the state of Utah and one
foreign office, Nevada State Bank with 25 offices in Nevada, and National Bank
of Arizona with 17 offices in Arizona. Aspen's subsidiaries are Pitkin County
Bank and Trust Company, a commercial bank with its main office in Pitkin County,
and one branch in each of Eagle and San Miguel Counties, Colorado; Centennial
Savings Bank, F.S.B., with seven offices/branches in Montezuma, Archuleta,
Montrose, and Mesa Counties, Colorado and San Juan County, New Mexico; and Val
Cor Bancorporation, a bank holding company whose principal asset is Valley
National Bank of Cortez, Colorado, a national banking association with three
offices/branches in Montezuma County, Colorado.
In the Reorganization, the shareholders of Aspen will become
shareholders of Zions. The approximately 3,720,780 outstanding shares of Aspen
Common Stock will be converted into the right to receive that number of shares
of Zions Common Stock calculated by dividing the Purchase Price of $73,000,000
plus certain accretions determined on the Effective Date of the Reorganization
by the Average Closing Price of Zions Common Stock and multiplying the number so
reached by the ratio of the number of shares of Aspen Common Stock outstanding
to the sum of that number of shares and the Option Equivalent Number. See
"Conversion of Aspen Shares."
Background of and Reasons for the Reorganization
Aspen.
Background. From time to time in the last few years, Charles B. Israel,
president and chief executive officer of Aspen, received informal inquiries from
certain large regional bank holding companies concerning a possible acquisition
of Aspen. No formal offers were received as a result of such inquiries. During
this period, several significant shareholders of Aspen expressed the view that
Aspen should consider a possible merger or sale.
In March 1995, after considering the improved financial performance of
Aspen, the prospects for Aspen's future growth, the strong bank merger and
acquisition market in Colorado and the continuing interest of several
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shareholders in a possible sale or merger, the Aspen Board requested a
presentation by Wallach regarding the bank acquisition market in Colorado, the
valuation of Aspen and a review of its strategic options regarding a possible
sale or merger. In October 1995, the Aspen Board approved the engagement of
Wallach to act as representative for Aspen to explore the market and contact
potential acquirers to determine the feasibility and economics of a merger of
Aspen with a major bank holding company in the form of a tax-free exchange of
stock. In April 1996, Aspen's management, with assistance from Wallach,
identified the 15 companies believed to be most likely to acquire Aspen in a
tax-free exchange of stock at a price acceptable to Aspen.
In June 1996, Wallach contacted the 15 potential acquirers to determine
their interest in Aspen and, based on discussions with Wallach, seven parties
elected to receive detailed written information about Aspen, four of these
parties elected to meet with management and three elected to submit written
indications of interest. An analysis of their proposals was presented by Wallach
to the Aspen Board on August 16, 1996.
After a comprehensive discussion, the Aspen Board selected two of the
potential acquirers to allow them to conduct detailed due diligence of Aspen in
order to finalize their merger proposals. Upon completion of the due diligence
by the potential acquirers, both potential acquirers elected to submit final
written offers for Aspen. An analysis of their final proposals was presented by
Wallach to the Aspen Board on October 4, 1996.
After a comprehensive discussion, the Aspen Board authorized Aspen's
management and Wallach to negotiate a definitive purchase agreement with Zions.
On November 19, 1996, after Zions performed additional due diligence on Aspen,
the definitive Agreement and Plan of Reorganization was executed by Zions and
Aspen providing for the proposed acquisition of Aspen by Zions in a stock-for-
stock, tax-free merger.
Aspen Board's Reasons for the Reorganization. The Aspen Board believes
that the Reorganization is fair to, and in the best interests of, Aspen and its
shareholders. Accordingly, the Board unanimously approved the Plan of
Reorganization and recommends that Aspen shareholders vote FOR the approval and
adoption of the Plan of Reorganization.
In reaching its determination that the Reorganization is fair to, and
in the best interests of, Aspen and its shareholders, the Board considered a
number of factors including, without limitation, the following:
- the current condition and growth prospects of Aspen and its
subsidiary banks, their historical results of operations and
their prospective results of operation were Aspen to remain
independent;
- the economic, business and competitive climate for banking and
financial institutions in Colorado, with special consideration
given to recent transactions that have increased the
competitive environment in the financial services and banking
industry, including the adoption by Congress of interstate
branch banking;
- the monetary value of the stock offered to Aspen shareholders
by Zions (i) in absolute terms, (ii) as compared to the value
of other
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stock-for-stock offers received by Aspen by qualified and
informed potential acquirers, whose offers were each less than
Zions' offer, and (iii) as compared to recent mergers and
acquisitions involving other banking and financial
institutions in Colorado;
- the potential market value, liquidity and dividend yield of
Aspen Common Stock if Aspen were to remain independent;
- the historically greater liquidity and dividend yield
represented by the Zions Common Stock to be received in the
Reorganization;
- the greater financial and management resources and customer
product offerings of Zions which could increase the
competitiveness of the combined institution in Aspen's market
area and its ability to serve the depositors, customers and
communities currently served by Aspen;
- the historical results of operations and financial condition
of Zions and the future prospects for Zions, including
anticipated benefits of the Reorganization;
- the future growth prospects of Zions following the
Reorganization;
- the fact that the Reorganization will be a tax-free
reorganization to Aspen shareholders for federal income tax
purposes; and
- the presentation of Wallach and the fact that Wallach would
render an opinion that the consideration to be received in the
Reorganization by Aspen's shareholders was fair to such
holders from a financial point of view.
THE ASPEN BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE PLAN OF REORGANIZATION.
Zions. For Zions, the Reorganization will provide the opportunity to
continue its recent expansion. In acquiring Aspen, Zions will be initiating its
presence in the western Colorado and northwestern New Mexico markets. The
expansion will be evidenced by Zions' both broadening its geographical base in
these markets and expanding the banking services it is able to provide.
Additionally, the Zions' expansion into western Colorado and northwestern New
Mexico, areas where heretofore Zions has not had operations and thus new
geographical regions of the United States, will allow Zions further to diversify
its banking operations.
The acquisition by Zions of Aspen will bring together the different
skills and resources of the two organizations and, together with the additional
skills and resources available in the broader Zions organization, will result in
the ability to make a wider spectrum of banking services available to consumers,
businesses and professionals in Aspen's geographic areas.
Voting Agreements
In connection with the Plan of Reorganization, all of the shareholder-
directors of Aspen, whose common share holdings aggregate approximately 21.25%
of the outstanding Aspen Common Stock as of March 31, 1997, have entered into
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agreements with Zions under which they have agreed, in their capacity as
shareholders, to vote their shares in favor of the Plan of Reorganization and to
support the Plan of Reorganization and to recommend its adoption by the other
shareholders of Aspen. Additionally, three non-director shareholders, whose
common share holdings aggregate approximately 25.5% of the outstanding Aspen
Common Stock, have agreed to vote their shares in favor of the Plan of
Reorganization.
The voting agreements are applicable to the directors only in their
capacities as shareholders and do not legally affect the exercise of their
responsibilities as directors of Aspen. The shareholder-directors also agreed in
their capacity as directors, until the earlier of consummation of the
Reorganization or termination of the Plan of Reorganization, to refrain from
soliciting or, subject to their fiduciary duties to shareholders, negotiating or
accepting any offer of merger, consolidation, or acquisition of any of the
shares or all or substantially all of the assets of Aspen or any of its
subsidiaries.
The form of the voting agreements has been filed with the SEC as an
exhibit to the Registration Statement and is incorporated herein by reference.
The foregoing summary of the agreements is qualified in its entirety by
reference to such filing.
Stock Option Agreement
As an inducement for Zions' entering into the Plan of Reorganization,
Aspen granted Zions an option (herein, the "Option") to purchase up to 19.9% of
Aspen's Common Stock (or approximately 16.6% of the Aspen Common Stock that
would be outstanding after giving effect to the exercise of the Option). Under
the Option, Zions has the right to purchase up to 739,825 shares of Aspen Common
Stock at a cash purchase price of $18.875 per share. Zions may exercise the
Option only upon the occurrence of a "triggering event" which has been defined
to include:
(a) The Board of Directors of Aspen shall have (i) authorized
the execution of an agreement with any person or group of persons other
than Zions or a subsidiary of Zions ("Third Party") pursuant to which
such Third Party will acquire, merge or consolidate with, or acquire
all or substantially all of the assets of Aspen (or engage in a
substantially similar transaction), (ii) supported an offer or proposal
by any Third Party to acquire, merge or consolidate with Aspen, or
acquire all or substantially all of the assets of Aspen (or to engage
in a substantially similar transaction), or (iii) recommended to the
shareholders of Aspen that they not approve the Plan of Reorganization;
or
(b) the termination of the Plan of Reorganization by Zions due
to a willful material breach by Aspen; or
(c) the receipt by a Third Party of all required approvals of
all governmental authorities to acquire beneficial ownership of more
than 25 percent of Aspen Common Stock; or
(d) upon the public announcement by any Third Party with
financial ability of a bona fide proposal or intention to in any
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manner acquire control of Aspen and, thereafter, if such proposal has
not been withdrawn at least twenty days prior to the meeting of
shareholders of Aspen called to vote on the Plan or Reorganization,
Aspen's shareholders fail to approve the Plan of Reorganization by the
vote required by applicable law at the meeting of shareholders called
for such purpose.
The Option and the Option Agreement will terminate upon the earliest of
(a) the date twelve months after the first occurrence of a Trigger Event, as
defined, (b) the date upon which consummation of the Reorganization occurs, (c)
the mutual agreement of the parties to the Plan of Reorganization, (d) the date
ninety days after the date that written certification of the vote of Aspen's
shareholders is delivered to Zions indicating that Aspen's shareholders have not
approved the Reorganization following the public announcement by any person or
group of persons other than Zions or a subsidiary of Zions with financial
ability of a bona fide proposal or intention to acquire in any manner control of
Aspen, and thereafter if such proposal has not been withdrawn at least twenty
days prior to such meeting of shareholders called to vote upon the Plan of
Reorganization, (e) the date of termination of the Plan of Reorganization by
Aspen if any of the representations and warranties of Zions in the Plan of
Reorganization was materially incorrect when made or in the event of a material
breach or material failure by Zions of any covenant or agreement of Zions
contained in the Plan of Reorganization which has not been, or cannot be, cured
within thirty days after written notice of such breach or failure is given to
Zions, and (f) termination of the Plan of Reorganization by mutual consent of
the parties. If, after the occurrence of a Trigger Event, the Option cannot be
exercised by reason of any Suit (as defined in Section 6(c) of the Option
Agreement) commenced prior to the expiration of the Option as provided above,
the termination of the Option Agreement will be extended until the earlier of
(a) the date five business days after such impediment to exercise shall have
been removed, (b) termination of the Option and the Option Agreement by Aspen if
Aspen, at any time after the commencement of such a Suit, determines in its sole
judgment that failure to terminate the Option would be adverse to the interests
of Aspen or its shareholders and Aspen gives notice of such termination to Zions
and Aspen makes a cash payment to Zions in the amount of $2,500,000, or (c)
termination of the Option and the Option Agreement by Zions if Zions' right to
exercise the Option is judicially determined to be unenforceable following the
occurrence of a Trigger Event or if Aspen shall materially breach its
obligations to cooperate and use all reasonable efforts to defend against a
suit, claim, action, or proceeding which questions the validity or legality of
the Option Agreement and to cooperate reasonably regarding any other impediment
to consummation of the transactions contemplated by the Option Agreement.
If, at any time after the commencement of such a Suit, Aspen in its
sole judgment determines that its failure to terminate the Option as described
in the preceding paragraph would be adverse to the interests of Aspen or its
shareholders, Aspen may terminate the Option Agreement and the Option by giving
notice of such termination to Zions and making a cash payment to Zions in the
amount of $2,500,000 payable by delivery of a bank check to the order of Zions.
The purpose of the Option Agreement is to facilitate consummation of
the Reorganization. A copy of the Option Agreement is attached as Exhibit III to
the Plan of Reorganization and as Exhibit 12 to Zions' SEC Schedule 13D dated
November 19, 1996. See "Available Information" above.
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Non-Investment Agreements
The Plan of Reorganization requires that Charles B. Israel, president
and chief executive officer of Aspen, and each director and advisory director of
Aspen or an Aspen subsidiary who owns in excess of 2% of the outstanding Aspen
Common Stock at the Effective Date enter into a non-investment agreement with
Zions (herein, the "Non-Investment Agreement"). The Non-Investment Agreement
provides that such person will not own any of the outstanding shares of the
capital stock of any corporation that meets both of the following criteria:
(a) it or an affiliated corporation solicits, accepts, or
holds deposits, which for purposes of the Non-Investment Agreement
means money or its equivalent received or held by a person in the usual
course of business and for which it has given or is obligated to give
credit, either conditionally or unconditionally, to a demand, checking,
savings, time, passbook, negotiable order of withdrawal, thrift or
share account, or which is evidenced by its passbook, certificate of
deposit, thrift certificate, investment certificate, certificate of
indebtedness, or other similar instrument, or a check, draft or share
draft drawn against a deposit account and certified by a person, on
which the person is primarily liable; and
(b) either the deposits held on a consolidated basis by it (if
it is an Ultimate Parent Entity, as defined below) or by its Ultimate
Parent Entity in offices situated in the Market Area (as defined below)
exceed 10 percent of such entity's total consolidated deposits, or the
loan and lease revenue derived on a consolidated basis by it (if it is
an Ultimate Parent Entity) or by its Ultimate Parent Entity from
offices situated in the Market Area exceeds 10 percent of such entity's
total consolidation loan and lease revenue.
For purposes of the Non-Investment Agreement, "Market Area" means the
Colorado Counties of Archuleta, Delta, Dolores, Eagle, Garfield, Gunnison,
Hinsdale, La Plata, Mesa, Mineral, Montezuma, Montrose, Ouray, Pitkin, San Juan,
and San Miguel, and the New Mexico County of San Juan, and "Ultimate Parent
Entity" means a corporation registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"), or as a savings and
loan holding company under section 10 of the Home Owners' Loan Act of 1933, as
amended (the "S&LHC Act"), and none of whose affiliates would be required to be
registered as a bank holding company under the BHC Act or as a savings and loan
holding company under the S&LHC Act by virtue of its control over it.
A copy of the Non-Investment Agreement is attached as Exhibit VII to
the Plan of Reorganization, which has been filed as an exhibit to Zions' SEC
Schedule 13D dated November 19, 1996. See "Available Information" above.
Required Vote; Management Recommendation
Approval of the Plan of Reorganization requires the affirmative vote of
the holders of a majority of the outstanding shares of Aspen Common Stock at the
Special Meeting voting in person or by proxy. Because approval requires the
affirmative votes of a majority of all outstanding shares, a failure to vote, an
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abstention, or a broker's failure to vote shares held in street name will have
the same legal effect as a vote against approval of the Plan of Reorganization.
In reaching their determination to support the Reorganization and to recommend
that Aspen shareholders vote to approve the Reorganization, the Board of
Directors of Aspen retained Wallach, an independent financial advisory
consultant, to evaluate the Reorganization and its fairness to the Aspen
shareholders from a financial point of view. Wallach has opined that the merger
consideration to be paid to the shareholders of Aspen by Zions is fair to the
shareholders of Aspen from a financial point of view. The Board of Directors
believes that the Reorganization is fair to the Aspen shareholders from a
financial point of view and furthermore is in the best interests of the Aspen
shareholders, its employees, and its customers. THE BOARD OF DIRECTORS OF ASPEN
UNANIMOUSLY RECOMMENDS THAT ASPEN SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PLAN
OF REORGANIZATION.
The Board of Directors of Zions has approved the Plan of
Reorganization, and under the Utah Business Corporation Act no approval of the
Plan of Reorganization by the shareholders of Zions is required. Zions owns
50,000 shares of Aspen Common Stock, or approximately 1.3% of the issued and
outstanding shares of Aspen Common Stock. Zions purchased these shares in a
series of open market transactions in January 1997. Zions will vote its shares
of Aspen Common Stock in favor of the Plan of Reorganization.
Opinion of Aspen's Financial Advisor
Aspen has received an opinion from Wallach that, as of the date of this
Proxy Statement/Prospectus, the consideration to be received from Zions was fair
to the Aspen shareholders from a financial point of view. The full text of
Wallach's opinion dated as of the date of this Proxy Statement/Prospectus, which
sets forth matters considered in connection with such opinion, is attached
hereto as Appendix A and should be read in its entirety by Aspen's shareholders.
This summary of the opinion is qualified in its entirety by reference to the
full text of the opinion.
The Aspen Board retained Wallach as its financial advisor on the basis
of the firm's experience and expertise with the financial services and banking
industry and with transactions similar to the Reorganization.
In connection with delivering its fairness opinion, Wallach, among
other things, did the following:
o Reviewed the Agreement and Plan of Reorganization;
o Reviewed certain publicly available financial statements and
other financial information for Aspen.
o Reviewed and evaluated the current condition of, and growth
prospects for, Aspen and its subsidiary banks, including
financial projections prepared by Aspen's management;
o Discussed with Aspen's management Aspen's past and current
operations and financial conditions and the prospects of Aspen
if it were to remain independent;
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o Reviewed the historical stock trading activity of Aspen's Common
Stock and considered the prospects for the value, liquidity,
dividend yield and appreciation of Aspen's Common Stock if Aspen
were to remain independent;
o Evaluated the economic, business and competitive climate for
banking institutions in Colorado, with special consideration
given to recent transactions that may have increased the
competitive environment of the financial services and banking
industry;
o Reviewed the process leading to the Zions offer, including a
review of potential acquirers contacted and their responses
relative to a potential acquisition of Aspen;
o Compared the various initial and final offers received from
interested parties and determined that terms of the Agreement
represented the highest value in absolute terms;
o Compared the terms of the Agreement to recent transactions
involving other institutions of similar size in Colorado;
o Examined the price and trading activity for Zions Common Stock;
o Evaluated the implications for Aspen's shareholders receiving
Zions Common Stock with regard to prospects for the value,
liquidity, dividend yield and appreciation; and
o Reviewed certain publicly available financial information for
Zions, visited certain Zions facilities in Salt Lake City, and
discussed with Zions management the prospects of Zions.
Neither Zions nor Aspen imposed any limitations upon the scope of the
investigation performed by Wallach in formulating its opinion. In rendering its
opinion, Wallach did not independently verify the asset quality and financial
condition of Zions or Aspen, but instead relied upon the data provided by or on
behalf of Zions and Aspen to be true and accurate in all material respects.
Wallach relied without independent verification upon the accuracy and
completeness of all the financial and other information reviewed by it for
purposes of the fairness opinion. The fairness opinion is necessarily based on
information as of the date thereof. The fairness opinion is directed only to the
consideration to be received by Aspen shareholders for their shares if the
Reorganization is consummated and does not constitute a recommendation to any
Aspen shareholder as to how such shareholder should vote at the Special Meeting.
Following is a brief summary of the material analyses utilized by
Wallach in arriving at its fairness opinion. This summary does not purport to be
a complete description of the analyses performed by Wallach.
Implied Zions Offer Price. The closing stock price of Zions was $87.75
on October 2, 1996, the date for which the Board evaluated Zions' and the other
potential acquirer's final proposals. The resulting Zions offer price (before
transaction expenses) for each share of Aspen Common Stock was $19.67. The
implied multiple of trailing 12-month earnings of Aspen for the year ended
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June 30, 1996, was 14.9. The implied multiple of book value at June 30, 1996,
was 246.5%.
Based on the average closing price of Zions Common Stock for the twenty
trading days ended February 28, 1997, of $125.71, and assuming Zions exercised
its right to give notice to terminate and Aspen elects to change the exchange
ratios (see Plan of Reorganization--Conversion of Aspen Shares--Exchange
Formula), and the Purchase Price were $73,000,000, the resulting Zions exchange
ratio at that time would be 0.1748 and the resulting exchange offer price for
Aspen would be $21.98. The implied multiple of trailing 12-month earnings for
the period ended June 30, 1996, would be 16.6. The implied multiple of book
value per share at June 30, 1996, would be 292.0%.
Comparison With the Other Final Offer. Wallach compared the Zions offer
to the other final offer received from a major bank holding company. The other
offer involved a stock-for-stock merger, pursuant to which Aspen shareholders
would receive stock of the offeror having a value of less than Zions' offer
based on the then stock price of the offeror. Wallach's examination of the offer
included, but was not limited to, a comparison of pricing, the underlying
security and the implications for tax and liquidity. The Zions offer was also
higher than a preliminary indication of interest received from another potential
buyer for the August 16th Aspen Board meeting.
Analysis of Selected Bank Mergers. Wallach reviewed publicly available
information on the three bank merger and acquisition transactions known by
Wallach to have occurred since January 1, 1995, in Colorado, for which Wallach
believed the sellers were similar to Aspen in size, market and financial
performance. Wallach compared certain percentages and multiples implied by the
Zions offer with comparable percentages and multiples for these transactions.
The average price offered in the three transactions as a multiple of trailing
earnings was 14.91 as compared to 14.90 associated with the Zions offer at the
time of the October 4th Aspen Board Meeting and 16.6 based upon the average
closing price of Zions Common Stock for the twenty days ended February 28, 1997.
The average multiple of book value in these transactions was 236.7% as compared
to 246.5% associated with the Zions offer at the time of the October 4th Aspen
Board Meeting and 275.4% based upon the average closing price of Zions Common
Stock for the twenty days ended February 28, 1997.
Wallach also noted that all of the assets of the three comparable
companies used were those of commercial banks. In contrast, approximately 49% of
Aspen's assets were represented by Centennial Savings Bank FSB, a federal
savings bank. In recent years, savings and loan and savings bank companies have
tended to sell for lower prices than commercial banks.
Wallach is not aware of any merger or acquisition transactions
involving the sale of commercial banks which it believes are comparable to Aspen
and for which information is publicly available since October 2, 1996.
Zions Stock Trading History and Valuation. Wallach examined the history
of trading prices for Zions compared to a select group of six other large
regional bank holding companies who are active in acquisitions in the Rocky
Mountain region. The "Index Group" is comprised of Banc One Corporation,
Community First Bankshares, First Bank System, Inc., First Security Corporation,
KeyCorp and Norwest Corporation. Wallach also examined the valuation of Zions
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relative to the Index Group in relation to earnings, book value, dividend yield
and other factors. In this analysis, Wallach placed greater emphasis on the more
recent period and projected data in evaluating market valuation. The analysis
showed, among other things, that for the trailing 12-month period ended June 30,
1996, and projected 1996 and 1997 calendar years, based on stock prices at
October 2, 1996, the price to earnings ratio for Zions was 13.8, 12.9 and 11.8
respectively, compared to 13.6, 12.5 and 11.2 for the Index Group, respectively.
Based on Zions stock price on October 2, 1996, the price to book value for Zions
was 274% compared to 233% for the Index Group and the common dividend yield for
Zions was 1.9% compared to 2.9% for the Index Group. Based on Zions stock price
on February 28, 1997, the trailing 12-month price to earnings multiple was 18.2,
the price to book value was 361% and the common dividend yield was 1.4%. As of
October 2, 1996, the consensus of research analysts' projections of five years'
earnings growth rate was 12.0% for Zions compared to 10.5% for the Index Group.
The return on average equity for the six months ended June 30, 1996, was 22.2%
for Zions compared to 18.6% for the Index Group. The ratio of equity to assets
for Zions was 7.2% compared to 7.7% for the Index Group.
Wallach is of the opinion that the Reorganization is fair to Aspen
shareholders from a financial point of view.
Wallach believes that its analyses and the summary set forth above must
be considered as a whole and that selecting portions of its analyses and the
factors considered by them could create an incomplete view of the process
underlying the preparation of its fairness opinion. No company or transaction
used in the company comparable transaction analysis is identical to Aspen, Zions
or the Reorganization. Accordingly, in its analysis Wallach used complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value or the acquisition value of the companies to which they are being
compared.
For Wallach's services in connection with preparing a plan for
obtaining acquisition offers for Aspen, soliciting and negotiating such
acquisition offers, rendering its opinion as to the fairness of the
Reorganization to Aspen's shareholders from a financial point of view and
certain other services in connection therewith, Aspen has agreed to pay Wallach
certain fees. Wallach will receive a cash fee upon the effectiveness of the
Reorganization equal to 1.25% of the first $55 million and 3.00% of the amount
in excess of $55 million received by Aspen's shareholders in the transaction
based on the value of the Zions' Common Stock issued to Aspen's shareholders in
the Reorganization. From December 1995 to the effective date of the
Reorganization Wallach has or will receive a monthly retainer of $7,500, which
amounts will be credited against the transaction fee due at the effectiveness of
the Reorganization. Wallach has also received reimbursement of its actual
out-of-pocket expenses and Aspen has agreed to indemnify Wallach against certain
liabilities, including liabilities under federal securities laws.
Conversion of Aspen Shares
Exchange Formula. According to the valuation formula set forth in the
Plan of Reorganization, the total number of shares of Zions Common Stock to be
received by each Aspen shareholder will not be determined until the Effective
Date of the Reorganization. The number of shares of Zions Common Stock to be
received by each Aspen shareholder is based upon the actual average trading
price
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of Zions Common Stock as reported on NASDAQ-NMS during the Pricing Period,
subject to an upper limit of $93.00 (unless under the circumstances Aspen is
permitted to make and does make the Company Election) and a lower limit of
$83.00 (unless under the circumstances Zions is permitted to make and does make
the Zions Election) (the "Average Closing Price") and upon the Purchase Price,
comprising the sum of (i) $73,000,000, (ii) the amount of consolidated net
undistributed income of Aspen during the period beginning on July 1, 1996 and
ending on the close of business on the last day of the calendar month preceding
the Effective Date, (iii) the product of the daily average of the net
undistributed income of Aspen during the period calculated in the manner of item
(ii) above times the number of days in the month of the Effective Date which
precede the Effective Date, and (iv) the aggregate contributions to capital
resulting from the exercise of stock options of Aspen after June 30, 1996. The
amounts calculated items (ii) and (iii) above may be negative numbers; the
effect of summing such negative number(s) would be a reduction in the Purchase
Price. On the Effective Date of the Reorganization, each outstanding share of
Aspen Common Stock as of the Effective Date will be converted into the right to
receive that number of shares of Zions Common Stock calculated by dividing the
Purchase Price of $73,000,000 plus certain accretions (items (ii), (iii), and
(iv) above in this paragraph) by the Average Closing Price of Zions Common
Stock, and by further dividing the number so reached by the sum of the number of
shares of Aspen Common Stock outstanding at the Effective Date and the Option
Equivalent Number.
On April 10, 1997, the closing price of Zions Common Stock was $115 3/8
per share and Aspen had issued and outstanding 3,720,780 shares of its Common
Stock. The Daily Sales Price (as defined herein) has been in excess of the
$93.00 ceiling to the Average Closing Price established in the Plan of
Reorganization since November 20, 1996. The Plan of Reorganization provides a
mechanism under such circumstances whereby the parties might act sequentially to
cause the Average Closing Price to be in excess of $93.00, despite the $93.00
ceiling, which would reduce the number of shares of Zions Common Stock to be
issued to holders of Aspen Common Stock. In accordance with the Plan of
Reorganization, the Average Closing Price can be higher than $93.00, and as a
result the fraction of a share of Zions Common Stock to be received for each
share of Aspen Common Stock will be smaller, in the event that Zions is entitled
to and determines to provide notice to Aspen of the intention of Zions to
terminate the Plan of Reorganization by reason of the price appreciation of
Zions Common Stock having met certain criteria set forth in the Plan of
Reorganization and thereafter Aspen exercises the Company Election (or, in the
reverse situation, lower than the $83.00 floor if Aspen is entitled to and
determines to provide notice to Zions of the intention of Aspen to terminate the
Plan of Reorganization by reason of the price decline of Zions Common Stock
having met certain criteria set forth in the Plan of Reorganization and
thereafter Zions exercises the Zions Election). See "Summary -- Certain
Definitions -- Company Election" and "-- Zions Election" and "Plan of
Reorganization -- Authorized Termination and Damages for Breach."
On April 10, 1997, the appreciation in the price of Zions Common Stock
since November 19, 1996 has exceeded that of the KBW 50 Index (as defined
herein) by more than 15 percentage points. If during the Pricing Period (as
defined herein) the average of the Daily Sales Prices of Zions Common Stock is
higher than $93.00 and the appreciation in the price of Zions Common Stock since
November 19, 1996 exceeds that of the KBW 50 Index by more than 15 percentage
points, these factors would enable Zions to provide notice to Aspen of the
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intention of Zions to terminate the Plan of Reorganization and, hence, enable
Aspen to exercise the Company Election. Assuming that Zions was entitled to and
determined to provide notice to Aspen of the intention of Zions to terminate the
Plan of Reorganization by reason of these price appreciation factors having met
the criteria set forth in the Plan of Reorganization, and thereafter Aspen
exercised the Company Election, if the Reorganization had been consummated as of
April 10, 1997, the Average Closing Price after exercise of the Company Election
would have been $100.64. The parties have assumed for the purpose of the
calculation that follows that the Average Closing Price was equal to the closing
price of Zions on the NASDAQ-NMS on April 10, 1997. Assuming that the Purchase
Price equalled $73,968,000 on April 10, 1997, shareholders of Aspen under such
circumstances would have received .190232 shares of Zions Common Stock for each
share of Aspen Common Stock or an equivalent consideration to holders of Aspen
Common Stock of $21.95 per share.
Since there can be no assurance that Zions will provide notice to Aspen
of Zions' intention to terminate the Plan of Reorganization, even if it is
entitled to do so, and that Aspen upon receipt of any such notice will exercise
the Company Election, in each case if permitted by the Plan of Reorganization,
it is possible under such circumstances that the Average Closing Price could be
$93.00. Assuming under such circumstances that the Purchase Price equalled
$73,968,000 on April 10, 1997, the Reorganization had been consummated as of
that date, and the Average Closing Price of Zions Common Stock had been $93.00,
shareholders of Aspen would have received .205859 shares of Zions Common Stock
for each share of Aspen Common Stock or an equivalent consideration to holders
of Aspen Common Stock of $23.75 per share.
Because the market price of the shares of Zions Common Stock is subject
to fluctuation, the per share stock distribution may change before the
Reorganization. See "Plan of Reorganization." Aspen shareholders are encouraged
to obtain current market quotations for Zions Common Stock and Aspen Common
Stock and to consider the interplay between the quotations and the definitions
of "Average Closing Price," "Company Election," and "Zions Election." See
"Certain Definitions" above. No assurance can be given as to the market price of
Zions Common Stock or Aspen Common Stock at, or in the case of Zions Common
Stock after, the Effective Date.
Surrender of Certificates. As promptly as practicable after the
Effective Date of the Reorganization, Zions First National Bank, Salt Lake City,
Utah, the exchange agent designated by Aspen and Zions in the Plan of
Reorganization, will send to each shareholder of record of Aspen Common Stock a
letter of transmittal containing instructions as to how to effect the exchange
of Aspen Common Stock certificates for certificates representing the shares of
Zions Common Stock into which their shares have been converted. Aspen
shareholders should not send in their certificates until they receive such
written instructions. However, certificates should be surrendered promptly after
instructions to do so are received.
Any dividends declared on Zions Common Stock after the Effective Date
of the Reorganization will apply to all whole shares of Zions Common Stock into
which shares of Aspen Common Stock will have been converted in the
Reorganization. However, no former Aspen shareholder will be entitled to receive
any such dividend until such shareholder's Aspen Common Stock certificates have
been surrendered for exchange as provided in the letter of transmittal. Upon
such surrender, the shareholder will be entitled to receive all such dividends
payable on the whole shares of Zions Common Stock represented by the surrendered
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certificate(s) (without interest thereon and less the amount of taxes, if any,
which may have in fact been imposed or paid thereon).
Payment for Fractional Shares. No fractional shares of Zions Common
Stock will be issued in connection with the Reorganization. Instead, each Aspen
shareholder who surrenders for exchange Aspen Common Stock certificates
representing a fraction of a share of Zions Common Stock will be entitled to
receive, in addition to a certificate for the whole shares of Zions Common Stock
represented by the surrendered certificates, cash in an amount equal to such
fractional part of a share multiplied by the Average Closing Price of Zions
Common Stock.
Unexchanged Certificates. On the Effective Date of the Reorganization,
the stock transfer books of Aspen will be closed, and no further transfers of
Aspen Common Stock will be made or recognized. Certificates for Aspen Common
Stock not surrendered for exchange will entitle the holder to receive, upon
surrender as provided in the letter of transmittal, only a certificate for the
whole shares of Zions Common Stock represented by such certificates, plus
payment of any amount for a fractional share or dividends to which such holder
is entitled as outlined above, and without any interest thereon.
Adjustment of Exchange Formula. The Plan of Reorganization contains
provisions for the proportionate adjustment of the exchange ratio in the event
of a stock dividend, stock split, recapitalization or similar event involving
the Zions Common Stock or the Aspen Common Stock which occurs prior to the
Reorganization. Nevertheless, the Purchase Price will not be less than
$73,000,000 plus certain accretions (or, if accretions are a negative number,
minus their absolute value) and will not be adjusted except for such accretions.
Neither Zions nor Aspen anticipates declaring any stock dividend, stock split,
or recapitalization prior to the Effective Date.
Federal Income Tax Consequences of the Reorganization
The following discussion is a summary of the material federal income
tax consequences of the merger of Aspen with and into Zions (herein, the
"Merger") to Aspen and to the existing shareholders of Aspen, but does not
purport to be a complete analysis of all the potential tax effects of the
Merger. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, Internal Revenue Service ("IRS")
rulings and judicial decisions now in effect, all of which are subject to change
at any time by legislative, judicial, or administrative action. Any such change
may be applied retroactively. No information is provided herein with respect to
foreign, state or local tax laws or estate and gift tax considerations.
Shareholders of Aspen are urged to consult their own tax advisors as to specific
tax consequences to them of the Merger.
Aspen will receive an opinion from Rothgerber, Appel, Powers & Johnson
LLP, legal counsel to Aspen (the "Rothgerber Opinion") that, based upon the
facts and representations set forth or referred to in such opinion, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. No ruling will be requested from the IRS
with respect to the federal income tax consequences of the Merger. An opinion of
counsel only represents counsel's best judgment and is not binding on the IRS or
the courts. Accordingly, no assurance can be given that the IRS will agree with
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<PAGE>
counsel's conclusions, that the IRS will not challenge the tax treatment of the
Merger, or that such a challenge, if made, will not be successful.
Based upon the facts and representations which will be set forth or
referred to in the Rothgerber Opinion (including compliance with the continuity
of interest requirement), such opinion will provide, among other things, that
Aspen will not recognize gain or loss for federal income tax purposes upon the
Merger and that the shareholders of Aspen will have the following federal income
tax consequences upon the Merger: (i) no taxable gain or loss will be recognized
upon the receipt of Zions Common Stock; (ii) the tax basis of the Aspen Common
Stock surrendered in the Merger will be allocated to the Zions Common Stock to
be received in the Merger reduced by cash received; (iii) the holding period of
the Zions Common Stock to be received in the Merger will include the holding
period of the Aspen Common Stock surrendered in exchange therefor; and (iv) if
any cash is received in lieu of a fractional share of Zions Common Stock, gain
(or loss) will be recognized in an amount equal to the difference between the
cash received and the shareholder's basis in that fractional share.
The foregoing is intended only as a summary of certain federal income
tax consequences of the Reorganization under existing law and regulations, as
presently interpreted by judicial decisions and administrative rulings, all of
which are subject to change without notice, and any such change might be
retroactively applied to the Reorganization. Among other things, the summary
does not address state income tax consequences, local taxes, or the federal or
state income tax considerations that may affect the treatment of a shareholder
who acquired his Aspen Common Stock pursuant to an employee stock option or
other special circumstances. Accordingly, it is recommended that Aspen
shareholders consult their own tax advisors for specific advice concerning their
own tax situations, potential changes in the applicable tax law and all federal,
state and local tax matters in connection with the Reorganization.
A copy of the Rothgerber Opinion rendered as to the material federal
income tax consequences relating to the Reorganization is attached and set forth
in Appendix B of the Proxy Statement/Prospectus.
Interests of Certain Persons in the Transaction
The Plan of Reorganization provides that after the Reorganization
becomes effective, Pitkin County Bank and Trust Company ("Pitkin") will employ
Charles B. Israel, currently president and chief executive officer of Aspen and
Pitkin, pursuant to a two-year agreement as chief executive officer and a member
of the board of directors of Pitkin. The agreement provides that Mr. Israel will
receive an initial annual salary not less than the aggregate salary paid to Mr.
Israel by Pitkin and its affiliates as of June 30, 1996. Mr. Israel will be
considered annually for a discretionary bonus based upon his performance, and
will be entitled to other benefits normally afforded executive employees,
including employee benefit and stock option plans participation, retirement and
life insurance policies, and consideration for periodic raises or bonuses, based
upon performance and responsibility.
The employment agreement provides for severance benefits for Mr. Israel
upon the termination of his employment agreement for reasons other than his
death or disability or "for cause" (as defined in his employment agreement). In
the event of termination for reasons other than set forth in the preceding
sentence,
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<PAGE>
Mr. Israel shall receive salary (as defined in the employment agreement) payable
which shall have accrued as of the termination date of his employment and such
rights as Mr. Israel shall have accrued as of the termination date of his
employment under the terms of any plans or arrangements in which he
participates, any right to reimbursement for expenses accrued as of such
termination date, and the right to receive the cash equivalent of paid annual
leave and sick leave accrued as of such termination date.
Under his employment agreement, Mr. Israel has agreed that he will not
during the term of his employment (i) engage in the banking business other than
on behalf of Zions, Pitkin, or their affiliates within a prescribed market area;
(ii) directly or indirectly own, manage, operate, control, be employed by, or
provide management or consulting services in any capacity to any firm,
corporation, or other entity (other than Zions or Pitkin or their affiliates)
engaged in the banking business in such market area, or (iii) directly or
indirectly solicit or otherwise intentionally cause any employee, officer, or
member of the respective Boards of Directors of Zions or Pitkin or any of their
affiliates to engage in any action prohibited under (i) or (ii) above. The
employment agreement has described the prescribed market area as (i) the
Colorado Counties of Archuleta, Delta, Dolores, Eagle, Garfield, Gunnison,
Hinsdale, La Plata, Mesa, Mineral, Montezuma, Montrose, Ouray, Pitkin, San Juan,
and San Miguel; (ii) any other county in Colorado in which Zions or Pitkin or
any affiliate of either of them at any time during Mr. Israel's term of
employment shall be approved to operate a main or branch office at which
deposits are accepted; and (iii) San Juan County, New Mexico.
Outstanding Stock Options
At the date of this Proxy Statement/Prospectus, Aspen has outstanding
under its two stock option plans options representing a total of 253,222 shares
of Aspen Common Stock exercisable at prices ranging from $4.80 per share to
$19.00 per share. These options are held by a total of 29 individuals, including
options for 218,988 shares held by Aspen executive officers or directors who are
not employed by Aspen. The exercise dates of these options range from September
1990 to January 1999. These options were granted by Aspen from September 20,
1990 to January 2, 1997, when options to purchase an additional 19,509 shares of
Aspen Common Stock were granted at an exercise price of $19.00 per share,
including options for 10,109 shares in the aggregate to six executive officers
or directors of Aspen.
The Plan of Reorganization provides that each stock option to purchase
Aspen Common Stock not exercised prior to the Effective Date will automatically
be converted into an option to purchase, on the same terms as the option to
purchase Aspen Common Stock, and with the same dates of exercisability and of
expiration, that number of shares of Zions Common Stock equal to the number of
shares of Aspen Common Stock which the holder of such option would be entitled
to receive under Section 1.2 of the Plan of Reorganization had such option been
exercised immediately preceding the Effective Date. The applicable per-share
option price in effect immediately prior to the Effective Date will be adjusted
by dividing that option price by the number of shares of Zions Common Stock
which the holder of one share of Aspen Common Stock would be entitled to receive
under the Plan of Reorganization.
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<PAGE>
Executive officers and non-employee directors of Aspen currently hold
options to purchase additional shares of Aspen Common Stock at such prices as
follows:
<TABLE>
<CAPTION>
Average Range of
Number of Exercise Expiration
Name Position with Aspen Options Held Price Dates
- ---- ------------------- ------------ ----- -----
<S> <C> <C> <C> <C>
Morton A. Heller Chairman of the Board 23,563 $10.28 September 2003-
January 2006
Charles B. Israel President, Chief Executive 121,359 $ 7.28 January 2000-
Officer and Director January 2006
Thomas W. Griffiths Vice President -- -- --
Amy G. Beidleman Vice President, Chief 3,126 $ 5.60 January 2001-
Financial Officer, and January 2003
Secretary
J. Thomas Clark, Jr. Director 23,563 $10.23 September 2003-
January 2006
Carol Ann Kopf Director 25,126 $10.19 September 2003-
January 2006
Robert R. Oden Director 18,688 $10.40 September 2003-
January 2006
Christopher L. Tolk Director 3,563 $13.34 January 2004-
January 2006
</TABLE>
Inconsistent Activities
Aspen has agreed in the Plan of Reorganization that unless and until
the Reorganization has been consummated or the Plan of Reorganization has been
terminated in accordance with its terms, Aspen will not and will not permit any
of its subsidiaries to (i) solicit or encourage any inquiries or proposals by
any third person to acquire more than 1% of the Aspen Common Stock or any
capital stock of any of Aspen's subsidiaries or any significant portion of
Aspen's or such subsidiary's assets (whether by tender offer, merger, purchase
of assets or otherwise), (ii) afford any third party which may be considering
any such transaction access to Aspen's or any subsidiary's properties, books or
records except as required by law, (iii) enter into any discussions,
negotiations, agreement or understanding with respect to any such transaction or
(iv) authorize or permit any of its directors, officers, employees or agents to
do any of the foregoing. If Aspen becomes aware of any offer or proposed offer
to acquire any of its shares or any significant portion of its assets or of any
other matter which could adversely affect the Plan of Reorganization, Aspen is
required to give immediate notice thereof to Zions and to keep Zions informed of
the matter.
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<PAGE>
Conduct of Business Pending the Reorganization
The Plan of Reorganization contains covenants, representations and
warranties by Aspen as to matters which are typical in transactions similar to
the Reorganization.
Prior to the Effective Date, Aspen has agreed that Aspen will not, and
will insure that none of its subsidiaries will, without Zions' prior written
consent: (i) declare or pay cash dividends or property dividends with the
exception of customary cash dividends paid by Aspen or its subsidiaries in a
manner consistent with past practice and except a one-time cash dividend not
exceeding $1 million from Valley to Val Cor and from Val Cor to Aspen; (ii)
declare or distribute any stock dividend, authorize any stock split, authorize,
issue or make any distribution of its capital stock or other securities except
for the issuance of Aspen Common Stock upon exercise of existing stock options,
or grant any option to acquire such securities except pursuant to existing stock
option plans and in a number not exceeding 26,000 option shares; (iii) except as
contemplated by the Plan of Reorganization, merge into, consolidate with or sell
its assets to any other person, or enter into any other transaction or agree to
effect any other transaction not in the ordinary course of its business or
engage in any discussions concerning such a possible transaction; (iv) convert
the charter or form of entity of any Aspen subsidiary to any other charter or
form of entity; (v) make any direct or indirect redemption, purchase or other
acquisition of any of its capital stock; (vi) incur any liability or obligation,
make any commitment or disbursement, acquire or dispose of any property or
asset, make any agreement or engage in any transaction, except in the ordinary
course of its business; (vii) subject any of its properties or assets to any
lien, claim, charge, option or encumbrance, except in the ordinary course of its
business; (viii) institute or agree to any increase in the compensation of any
employee, except for ordinary increases in accordance with past practices not to
exceed (when aggregated with all other such increases) 4.5% per annum of the
aggregate payroll as of October 1, 1996; (ix) create or modify any pension or
profit-sharing plan, bonus, deferred compensation, death benefit or retirement
plan, or the level of benefits under any such plan, or increase or decrease any
severance or termination pay benefit or any other fringe benefit; (x) except to
directly facilitate the Reorganization, enter into any employment or personal
services contract with any person; (xi) purchase any loans or loan-participation
interests from, or participate in any loan originated by, Rocky Mountain Equity
and Mortgage Company or by any other person other than Aspen or a subsidiary of
Aspen; or (xii) permit its indirect subsidiary Eagle Service Corporation to
engage in any business activity.
Aspen has also agreed to carry on its business and manage its assets
and property diligently in the same manner as it has previously done and to use
its best efforts to preserve its business organization. Pending completion of
Reorganization or termination of the Plan of Reorganization, Aspen has agreed to
provide Zions with certain information and reports and access to other
information.
Conditions to the Reorganization
The obligations of Aspen and Zions to consummate the Reorganization are
subject to, among other things, the satisfaction of the following conditions:
(i) Aspen and Zions shall have received all orders, consents and approvals from
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all requisite governmental authorities for the completion of the Reorganization;
(ii) certain litigation, as specified in the Plan of Reorganization, shall not
have been instituted or threatened; (iii) the registration statement to be filed
by Zions pursuant to the Securities Act in connection with the registration of
the shares of Zions Common Stock to be used as consideration in connection with
the Reorganization shall have become effective under the Securities Act, and
Zions shall have received all required state securities laws ("Blue Sky")
permits and other required authorizations or confirmations of the availability
of exemption from registration requirements necessary to issue Zions Common
Stock in the Reorganization, and neither the registration statement nor any such
required permit, authorization or confirmation shall be subject to a stop-order
or threatened stop-order by the SEC or any state securities authority; (iv)
Aspen and Zions shall have determined that the Reorganization shall qualify as a
tax free reorganization under the Code and the regulations and rulings
promulgated thereunder; and (v) there shall be no adverse legislation or
government regulation which would make the transaction contemplated impossible.
The obligations of Zions to consummate the Reorganization are subject
to satisfaction or waiver of certain additional conditions, including: (i) the
shareholders of Aspen shall have authorized the Plan of Reorganization; (ii) all
representations and warranties made by Aspen in the Plan of Reorganization shall
be true and correct in all material respects on the Effective Date and Aspen
shall have performed in all material respects all of its obligations under the
Plan of Reorganization on or prior to the Effective Date; (iii) Rothgerber,
Appel, Powers & Johnson LLP, special counsel to Aspen, shall have rendered a
legal opinion to Zions in form and substance as set forth in the Plan of
Reorganization; (iv) during the period from September 30, 1996 to the Effective
Date, there shall be no material adverse change in the financial position or
results of operations of Aspen or its subsidiaries nor shall Aspen or its
subsidiaries have sustained any material loss or damage to their properties
which materially affects their ability to conduct their business; (v) on the
Effective Date the consolidated net worth of Aspen as determined in accordance
with generally accepted accounting principles shall not be less than $30,185,000
plus the aggregate contributions to capital as a result of the exercise of any
Aspen stock options on or after September 30, 1996; (vi) on and as of the
Effective Date, the aggregate reserve for loan losses of Aspen's subsidiaries as
determined in accordance with generally accepted accounting principles shall not
be less than $3,206,000; (vii) the CRA rating of Aspen and each of its
subsidiaries shall be no lower than the lower of "satisfactory" or the
respective CRA rating it was assigned at September 30, 1996; (viii) Centennial
shall be a "qualified thrift lender" under section 10 of the Home Owners' Loan
Act of 1933; (ix) Mr. Israel shall have entered into an employment agreement
with Zions in the form set forth in the Plan of Reorganization; (x) each of Mr.
Israel and the directors and advisory directors of Aspen and its banking
subsidiaries who own more than two percent of Aspen's common stock (except
advisory directors whose primary vocation is investing in financial
institutions) shall have entered into a non-investment agreement in the form set
forth in the Plan of Reorganization; and (xi) if the loan between Aspen and The
Laredo National Bank shall remain outstanding at the Effective Date, Laredo
National Bank shall have delivered to Aspen, in substance and form reasonably
acceptable to Zions, its written consent to the Reorganization, the assumption
or discharge by Zions of such loan, and the
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<PAGE>
release of the shares of the stock of Aspen's subsidiaries and Val Cor
Bancorporation which secure such loan.
The obligations of Aspen to consummate the Reorganization are subject
to the satisfaction or waiver of certain additional conditions, including: (i)
all representations and warranties made by Zions in the Plan of Reorganization
shall be true and correct in all material respects on the Effective Date and
Zions shall have performed all of its obligations under the Plan of
Reorganization on or prior to the Effective Date; (ii) receipt of a legal
opinion of Duane, Morris & Heckscher, special counsel to Zions, in form and
substance as set forth in the Plan of Reorganization; (iii) during the period
from September 30, 1996 to the Effective Date, there shall be no material
adverse change in the financial position or results of operations of Zions nor
shall Zions have sustained any material loss or damage to its properties which
materially affects its ability to conduct its business; (iv) the Zions Common
Stock shall be quoted on NASDAQ or shall be listed on a national securities
exchange.
Representations and Warranties
The representations and warranties of Zions and Aspen contained in the
Plan of Reorganization relate, among other things, to the organization and good
standing of Zions, Aspen, and their subsidiaries; the capitalization of Zions
and Aspen; the authorization by Zions and Aspen of the Plan of Reorganization
and the absence of conflict with laws or other agreements; the accuracy and
completeness of the financial statements and other information furnished to the
other party; the absence of material adverse changes since September 30, 1996;
the absence of undisclosed liabilities; and compliance with laws. Aspen has
additionally warranted that there has been since September 30, 1996 no material
deterioration in the quality of its consolidated loan portfolio and no material
increase in the consolidated level of its nonperforming assets or non-accrual
loans or in the level of its consolidated provision for credit losses or its
consolidated reserve for possible credit losses. Aspen has also warranted that
its consolidated reserve for possible credit losses is adequate to absorb
reasonably anticipated losses in the consolidated loan and lease portfolios of
Aspen in view of the size and character of such portfolios, current economic
conditions, and other factors.
Zions and Aspen have additionally warranted that there are no facts
known to them respectively which reasonably might materially adversely affect
their respective business, assets, liabilities, financial condition, results of
operations or prospects which have not been disclosed in their respective
financial statements or a certificate delivered to the other party.
Amendment and Waiver
Notwithstanding prior approval by the shareholders of Aspen, the Plan
of Reorganization may be amended in any respect by written agreement between the
parties, except that after such shareholder approval no amendment may prejudice
the economic interests of the shareholders of Aspen. Zions or Aspen may also, at
any time prior to the Effective Date, waive any condition or term of the Plan of
Reorganization provided that any such waiver must be in writing signed by the
party entitled to the benefit thereof and will be permitted only if it will not
have a materially adverse effect on the benefits intended under the Plan of
Reorganization to the shareholders of its or his corporation.
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Authorized Termination and Damages for Breach
The Plan of Reorganization may be terminated and abandoned at any time
prior to the Effective Date, notwithstanding approval of the shareholders of
Aspen, as follows: (i) by mutual consent of Zions and Aspen; (ii) unilaterally,
by either party if any of the representations and warranties of the other party
was materially incorrect when made or in the event of a material breach or
material failure by the other party of any covenant or agreement which has not
been, or cannot be, cured within thirty days after written notice has been
given; (iii) by Zions, if the average price of Zions Common Stock during the
Pricing Period was more than $93.00 and the increase in the price of Zions
Common Stock between November 19, 1996 and the Pricing Period (using the average
over such Pricing Period) exceeded the increase in the KBW Index by more than
fifteen percentage points and Zions has given Aspen written notice of its
intention to terminate the Reorganization and Aspen has not thereafter provided
Zions written notice of its desire to exercise the Company Election (as
defined); (iv) by Aspen if the average price of Zions Common Stock during the
Pricing Period was less than $83.00 and the decrease in the price of Zions
Common Stock between November 19, 1996 and the Pricing Period (using the average
over such Pricing Period) exceeded the decrease in the KBW Index by more than
fifteen percentage points and Aspen has given Zions written notice of its
intention to terminate the Reorganization and Zions has not thereafter provided
Aspen written notice of its desire to exercise the Zions Election (as defined);
(v) by either party if the Reorganization has become inadvisable by reason of
federal or state litigation to restrain or invalidate the Reorganization; or
(vi) by either party on or after September 30, 1997, if the Effective Date has
not occurred on or before that date.
If either party terminates the Plan of Reorganization because any of
the representations and warranties of a party was materially incorrect when
made, or because of a material breach or material failure by a party of a
covenant or agreement made under the Plan of Reorganization, then such party
whose representations and warranties were materially incorrect or who materially
breached or failed to perform its covenant or agreement shall be liable to the
other party or parties to the Plan of Reorganization solely to the extent of the
actual, reasonable out-of-pocket expenses, not to exceed $250,000, incurred by
the other party in connection with the negotiation and preparation of the Plan
of Reorganization and the carrying out of the transactions contemplated thereby.
Restrictions on Resales by Aspen Affiliates
The shares of Zions Common Stock issuable in the Reorganization have
been registered under the Securities Act, and such shares will generally be
freely tradable by the Aspen shareholders who receive Zions shares as a result
of the Reorganization. However, the registration does not cover resales by Aspen
shareholders who may be deemed to control or be under common control with Aspen
or Zions and who therefore may be deemed "affiliates" of Aspen or Zions as that
term is defined in Rule 144 under the Securities Act. Such affiliates are not
permitted to sell their shares of Zions Common Stock acquired in the
Reorganization except pursuant to (i) an effective registration statement under
the Securities Act covering the shares to be sold; (ii) the conditions
contemplated by Rules 144 and 145 under the Securities Act; or (iii) another
applicable exemption from the registration requirements of the Securities Act.
- 38 -
<PAGE>
The management of Aspen will notify those persons who it believes may be such
affiliates.
Expenses
Each party to the Plan of Reorganization will pay its own expenses,
including those of its own counsel, accountants, and tax advisors, incurred in
connection with the Plan of Reorganization. Aspen will pay the cost of printing
and delivering this Proxy Statement/Prospectus and other material to the Aspen
shareholders. Zions will pay the costs attributable to registering its stock
issuable pursuant to this Proxy Statement/Prospectus under federal and state
securities laws.
Government Approvals
Applications for approval (or requests for waiver of application
requirements) of the Reorganization must be made to, and approvals and consents
must be obtained from, appropriate federal, Utah, and Colorado regulators,
including the Board of Governors of the Federal Reserve System, the Commissioner
of Financial Institutions of Utah, and the Colorado Division of Banking.
Submissions have been made to each of these regulatory authorities. Federal law
prohibits consummation of the Reorganization until 30 days after the approvals
of the federal regulators have been obtained, except that this period may be
shortened to 15 days with the concurrence of the Attorney General of the United
States. All regulatory approvals have been obtained.
Effective Date of the Reorganization
It is presently anticipated that if the Plan of Reorganization is
approved by the shareholders of Aspen, the Reorganization will become effective
in the second quarter of 1997. However, as noted above, consummation of the
Reorganization is subject to the satisfaction of a number of conditions, some of
which cannot be waived. There can be no assurance that all conditions to the
Reorganization will be satisfied or, if satisfied, that they will be satisfied
in time to permit the Reorganization to become effective in the second quarter
of 1997. In addition, as also noted above, Zions and Aspen retain the power to
abandon the Reorganization or to extend the time for performance of conditions
or obligations necessary to its consummation, notwithstanding prior shareholder
approval.
Accounting Treatment
The Reorganization will be accounted for as a "purchase" for financial
reporting purposes. Under this method of accounting, Zions will adjust the
assets and liabilities of Aspen to their fair values as of the Effective Date.
The purchase price will be allocated to assets acquired and liabilities assumed
based upon their estimated fair values at the Effective Date. Deferred tax
assets and liabilities will be adjusted for the difference between the tax basis
of the assets and liabilities and their estimated fair values. Income of the
combined company will not include income (or loss) of Aspen prior to the
Effective Date.
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<PAGE>
Relationship Between Zions and Aspen
Neither Zions nor Aspen is aware of any material relationship between
Zions, its directors or officers or their affiliates, and Aspen, its directors
or executive officers, except as contemplated by the Plan of Reorganization or
as described herein. Zions owns 50,000 shares of Aspen Common Stock.
Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information
reflects the application of the purchase method of accounting. The following
tables, which show comparative historical per Common Share data for Zions and
Aspen (separately and pro-forma combined) and equivalent pro-forma per share
data for Aspen, should be read in conjunction with the financial information
incorporated herein by reference to other documents. Two pro-forma equivalent
tables are presented: one to reflect the situation where Zions is entitled and
determines to provide notice to Aspen of Zions' intention to terminate the Plan
of Reorganization by reason of the price appreciation of Zions Common Stock
having met certain criteria and thereafter Aspen exercises the Company Election;
the second to reflect the situation where either Zions has chosen not to provide
notice of its intention to terminate the Plan of Reorganization or Zions does
not have the right to such notice, in each of which cases the Average Closing
Price would be deemed to be $93.00. The pro-forma data in the table, presented
as of and for the year ended December 31, 1996, are presented for comparative
and illustrative purposes only and are not necessarily indicative of the
combined financial position or results of operations in the future or what the
combined financial position or results of operations would have been had the
Reorganization been consummated during the periods or as of the dates for which
the information in the table is presented.
<TABLE>
<CAPTION>
Historical Pro Forma
---------- ---------
Zions
and Aspen Aspen Aspen
Pro-Forma Equivalent Equivalent
Per Common Share Zions Aspen Combined(4) Pro-Forma(5) Pro-Forma(6)
- ---------------- ----- ----- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET INCOME (1)
For the year ended
December 31, 1996 $ 6.84 $ 1.07 $ 6.61 $1.26 $ 1.35
CASH DIVIDENDS(2)
For the year ended
December 31, 1996 $ 1.70 $ .20 $ 1.70 $ .32 $ .35
BOOK VALUE:(3)
As of December 31, 1996 $34.45 $ 8.36 $38.24 $7.27 $ 7.93
</TABLE>
- ----------------------
(1) Net Income per share is based on weighted average common and common
equivalent shares outstanding.
(2) Pro forma cash dividends represent historical cash dividends of Zions.
(3) Book value per common share is based on total period-end of Zions
shareholders' equity.
(4) Pro forma combined net income per share represents historical net income
of Zions and Aspen adjusted for amortization of goodwill resulting from
purchase accounting computed using historical weighted
- 40 -
<PAGE>
average common and common equivalent shares of Zions adjusted by
computed common and common equivalent shares to be issued in the
purchase. Pro forma combined book value per share represents historical
total shareholders' equity of Zions adjusted by the amortization of
goodwill resulting from purchase accounting computed using Zions'
historical common shares outstanding adjusted by computed common shares
to be issued in the purchase. (5) Assumes that Zions is entitled and
has determined to provide notice to Aspen of Zions' intention to
terminate the Plan of Reorganization by reason of the price
appreciation of Zions Common Stock having met certain criteria and
thereafter Aspen has exercised the Company Election. Pro-forma
equivalent amounts are computed by multiplying the pro-forma combined
amounts by the estimated exchange ratio as of April 10, 1997 and assume
a Purchase Price of $73,968,000, an Average Closing Price of $100.64
as of April 10, 1997, and a resulting exchange ratio of .190232 share
of Zions Common Stock for each share of Aspen Common Stock.
(6) Assumes that either Zions has chosen not to provide notice of its
intention to terminate the Plan of Reorganization or Zions does not
have the right to provide such notice. Pro-forma equivalent amounts are
computed by multiplying the pro-forma combined amounts by the estimated
exchange ratio as of April 10, 1997 and assume a Purchase Price of
$73,968,000, an Average Closing Price of $93.00 as of April 10, 1997,
and a resulting exchange ratio of .205859 Share of Zions Common Stock
for each share of Aspen Common Stock.
SUPERVISION AND REGULATION
The information contained in this section summarizes portions of the
applicable laws and regulations relating to the supervision and regulation of
Zions and its subsidiaries. These summaries do not purport to be complete, and
they are qualified in their entirety by reference to the particular statutes and
regulations described.
Zions
Zions is a bank holding company within the meaning of the Bank Holding
Company Act and is registered as such with the Federal Reserve Board. Under the
current terms of that Act, Zions' activities, and those of companies which it
controls or in which it holds more than 5% of the voting stock, are limited to
banking or managing or controlling banks or furnishing services to or performing
services for its subsidiaries, or any other activity which the Federal Reserve
Board determines to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In making such determinations, the
Federal Reserve Board is required to consider whether the performance of such
activities by a bank holding company or its subsidiaries can reasonably be
expected to produce benefits to the public such as greater convenience,
increased competition or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices.
Bank holding companies, such as Zions, are required to obtain prior
approval of the Federal Reserve Board to engage in any new activity or to
acquire more than 5% of any class of voting stock of any company. Pursuant to
the Riegle-Neal Interstate Branching and Efficiency Act of 1994 ("Riegle-Neal
Act"), subject to approval by the Federal Reserve Board, bank holding companies
are authorized to acquire either control of, or substantial assets of, a bank
located outside the bank holding company's home state. These acquisitions are
subject to limitations, the most significant of which include adequate
capitalization and management of the acquiring bank holding company, existence
of the acquired bank for up to five years before purchase where required under
state law, existence
- 41 -
<PAGE>
of state laws that condition acquisitions on institutions making assets
available to a "state-sponsored housing entity," limitations on control by the
acquiring bank holding company of not more than 10% of the total amount of
deposits in insured depository institutions in the United States or not more
than 30% of the deposits in insured depository institutions within that state.
States may impose lower deposit concentration limits, so long as those limits
apply to all bank holding companies equally. The Riegle-Neal Act reaffirms the
right of states to segregate and tax separately incorporated subsidiaries of a
bank or bank holding company. The Riegle-Neal Act also affects interstate
branching and mergers. See "Interstate Banking" below.
The Federal Reserve Board is authorized to adopt regulations affecting
various aspects of bank holding companies. Pursuant to the general supervisory
authority of the Bank Holding Company Act and directives set forth in the
International Lending Supervision Act of 1983, the Federal Reserve Board has
adopted capital adequacy guidelines prescribing both risk-based capital and
leverage ratios.
Regulatory Capital Requirements
Risk-Based Capital Guidelines. The Federal Reserve Board has
established risk-based capital guidelines for bank holding companies. The
guidelines define Tier 1 Capital and Total Capital. Tier 1 Capital consists of
common and qualifying preferred shareholders' equity and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and 50% (and in some
cases up to 100%) of investment in unconsolidated subsidiaries. Total Capital
consists of Tier 1 Capital plus qualifying mandatory convertible debt, perpetual
debt, certain hybrid capital instruments, certain preferred stock not qualifying
as Tier 1 Capital, subordinated and other qualifying term debt up to specified
limits, and a portion of the allowance for credit losses, less investments in
unconsolidated subsidiaries and in other designated subsidiaries or other
associated companies at the discretion of the Federal Reserve Board, certain
intangible assets, a portion of limited-life capital instruments approaching
maturity and reciprocal holdings of banking organizations' capital instruments.
The Tier 1 component must constitute at least 50% of qualifying Total Capital.
Risk-based capital ratios are calculated with reference to
risk-weighted assets, which include both on-balance sheet and off-balance sheet
exposures. The risk-based capital framework contains four risk weight categories
for bank holding company assets -- 0%, 20%, 50% and 100%. Zero percent
risk-weighted assets include, generally, cash and balances due from Federal
Reserve Banks and obligations unconditionally guaranteed by the U.S. government
or its agencies. Twenty percent risk-weighted assets include, generally, claims
on U.S. Banks and obligations guaranteed by U.S. government sponsored agencies
as well as general obligations of states or other political subdivisions of the
United States. Fifty percent risk-weighted assets include, generally, loans
fully secured by first liens on one-to-four family residential properties,
subject to certain conditions. All assets not included in the foregoing
categories are assigned to the 100% risk-weighted category, including loans to
commercial and other borrowers. As of year-end 1992, the minimum required ratio
for qualifying Total Capital became 8%, of which at least 4% must consist of
Tier 1 Capital. At December 31, 1996, Zions' Tier 1 and Total Capital ratios
were 14.38% and 18.31%, respectively.
- 42 -
<PAGE>
The current risk-based capital ratio analysis establishes minimum
supervisory guidelines and standards. It does not evaluate all factors affecting
an organization's financial condition. Factors which are not evaluated include
(i) overall interest rate exposure; (ii) quality and level of earnings; (iii)
investment or loan portfolio concentrations; (iv) quality of loans and
investments; (v) the effectiveness of loan and investment policies; (vi) certain
risks arising from nontraditional activities; and (vii) management's overall
ability to monitor and control other financial and operating risks, including
the risks presented by concentrations of credit and nontraditional activities.
The capital adequacy assessment of federal bank regulators will, however,
continue to include analyses of the foregoing considerations and in particular,
the level and severity of problem and classified assets. Market risk of a
banking organization -- risk of loss stemming from movements in market prices --
is not evaluated under the current risk-based capital ratio analysis (and is
therefore analyzed by the bank regulators through a general assessment of an
organization's capital adequacy) unless trading activities constitute 10 percent
or $1 billion or more of the assets of such organization. Such an organization
(unless exempted by the banking regulators) and certain other banking
organizations designated by the banking regulators must, beginning on or before
January 1, 1998, include in its risk-based capital ratio analysis charges for,
and hold capital against, general market risk of all positions held in its
trading account and of foreign exchange and commodity positions wherever
located, as well as against specific risk of debt and equity positions located
in its trading account. Currently, Zions does not calculate a risk-based capital
charge for its market risk.
The following table presents Zions' regulatory capital position at
December 31, 1996 under the risk-based capital guidelines.
Risk-Based Capital
(Dollars in thousands)
Percent
of Risk-
Adjusted
Amount Assets
------ ------
Tier 1 Capital............................. $ 574,928 14.38%
Minimum Requirement........................ 159,868 4.00
--------- -------
Excess................................... $ 415,060 10.38%
========= =======
Total Capital.............................. $ 731,902 18.31%
Minimum Requirement........................ 319,737 8.00
--------- -------
Excess................................... $ 412,165 10.31%
========= =======
Risk-Adjusted Assets,
net of goodwill, excess deferred
tax assets and excess allowance.......... $3,996,710 100.00%
========== =======
Minimum Leverage Ratio. The Federal Reserve Board has adopted capital standards
and leverage capital guidelines that include a minimum leverage ratio of 3% Tier
1 Capital to total assets (the "leverage ratio"). The leverage ratio is used in
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<PAGE>
tandem with a risk-based ratio of 8% that took effect at the end of 1992. At
December 31, 1996, Zions' leverage ratio was 8.77%.
The Federal Reserve Board has emphasized that the leverage ratio
constitutes a minimum requirement for well-run banking organizations having
well-diversified risk, including no undue interest rate exposure, excellent
asset quality, high liquidity, good earnings, and a composite rating of 1 under
the Interagency Bank Rating System. Banking organizations experiencing or
anticipating significant growth, as well as those organizations which do not
exhibit the characteristics of a strong, well-run banking organization described
above, will be required to maintain strong capital positions substantially above
the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve Board has indicated that it will
consider a "tangible Tier I Capital Leverage Ratio" (deducting all intangibles)
and other indices of capital strength in evaluating proposals for expansion or
new activities.
The following table presents Zions' leverage ratio at December 31,
1996. A leverage ratio of 3% will be the minimum required for the most highly
rated banking organizations, and according to the Federal Reserve Board, other
banking organizations would be expected to maintain capital at higher levels.
(Dollars in thousands)
Percent
of Average
Assets, Net
Amount of Goodwill
------ -----------
Tier 1 Capital............................. $ 574,928 8.77%
Minimum Requirement........................ 196,728 3.00
---------- --------
Excess..................................... $ 378,200 5.77%
========== =========
Average Assets, net of goodwill and
deferred tax assets...................... $6,557,610 100.00%
========== =========
Other Issues and Developments Relating to Regulatory Capital. Pursuant
to such authority and directives set forth in the International Lending
Supervision Act of 1983, the Comptroller of the Currency, the FDIC and the
Federal Reserve Board have issued regulations establishing the capital
requirements for banks under federal law. The regulations, which apply to Zions'
banking subsidiaries, establish minimum risk-based and leverage ratios which are
substantially similar to those applicable to Zions. As of December 31, 1995, the
risk-based and leverage ratios of each of Zions' banking subsidiaries exceeded
the minimum requirements.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") requires the federal banking regulators to take "prompt corrective
action" in respect of banks that do not meet minimum capital requirements and
imposes certain restrictions upon banks which meet minimum capital requirements
but are not "well capitalized" for purposes of FDICIA. FDICIA establishes five
capital tiers: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized."
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<PAGE>
Implementing regulations adopted by the federal banking agencies define the
capital categories for banks which will determine the necessity for prompt
corrective action by the federal banking agencies. A bank may be placed in a
capitalization category that is lower than is indicated by its capital position
if it receives an unsatisfactory examination rating with respect to certain
matters.
Failure to meet capital guidelines could subject a bank to a variety of
restrictions and enforcement remedies. All insured banks are generally
prohibited from making any capital distributions and from paying management fees
to persons having control of the bank where such payments would cause the bank
to be undercapitalized. Holding companies of significantly undercapitalized,
critically undercapitalized and certain undercapitalized banks may be required
to obtain the approval of the Federal Reserve Board before paying capital
distributions to their shareholders. Moreover, a bank that is not well
capitalized is generally subject to various restrictions on "pass through"
insurance coverage for certain of its accounts and is generally prohibited from
accepting brokered deposits and offering interest rates on any deposits
significantly higher than the prevailing rate in its normal market area or
nationally (depending upon where the deposits are solicited). Such banks and
their holding companies are also required to obtain regulatory approval prior to
their retention of senior executive officers.
Banks which are classified undercapitalized, significantly
undercapitalized or critically undercapitalized are required to submit capital
restoration plans satisfactory to their federal banking regulator and guaranteed
within stated limits by companies having control of such banks (i.e., to the
extent of the lesser of five percent of the institution's total assets at the
time it became undercapitalized or the amount necessary to bring the institution
into compliance with all applicable capital standards as of the time the
institution fails to comply with its capital restoration plan, until the
institution is adequately capitalized on average during each of four consecutive
calendar quarters), and are subject to regulatory monitoring and various
restrictions on their operations and activities, including those upon asset
growth, acquisitions, branching and entry into new lines of business and may be
required to divest themselves of or liquidate subsidiaries under certain
circumstances. Holding companies of such institutions may be required to divest
themselves of such institutions or divest themselves of or liquidate
nondepository affiliates under certain circumstances. Critically
undercapitalized institutions are also prohibited from making payments of
principal and interest on debt subordinated to the claims of general creditors
as well as to the mandatory appointment of a conservator or receiver within 90
days of becoming critically undercapitalized unless periodic determinations are
made by the appropriate federal banking agency, with the concurrence of the
FDIC, that forbearance from such action would better protect the affected
deposit insurance fund. Unless appropriate findings and certifications are made
by the appropriate federal banking agency with the concurrence of the FDIC, a
critically undercapitalized institution must be placed in receivership if it
remains critically undercapitalized on average during the calendar quarter
beginning 270 days after the date it became critically undercapitalized.
Other Regulatory and Supervisory Issues
Pursuant to FDICIA, the federal banking agencies have adopted
regulations or guidelines prescribing standards for safety and soundness of
insured banks and
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<PAGE>
in some instances their holding companies, including standards relating to
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees and benefits, asset quality, earnings and stock valuation, as
well as other operational and managerial standards deemed appropriate by the
agencies. Upon a determination by a federal banking agency that an insured bank
has failed to satisfy any such standard, the bank will be required to file an
acceptable plan to correct the deficiency. If the bank fails to submit or
implement an acceptable plan, the federal banking agency may, and in some
instances must, issue an order requiring the institution to correct the
deficiency, restrict its asset growth or increase its ratio of tangible equity
to assets, or imposing other operating restrictions.
FDICIA also contains provisions which, among other things, restrict
investments and activities as principal by state nonmember banks to those
eligible for national banks, impose limitations on deposit account balance
determinations for the purpose of the calculation of interest, and require the
federal banking regulators to prescribe, implement or modify standards for
extensions of credit secured by liens on interests in real estate or made for
the purpose of financing construction of a building or other improvements to
real estate, loans to bank insiders, regulatory accounting and reports, internal
control reports, independent audits, exposure on interbank liabilities,
contractual arrangements under which institutions receive goods, products or
services, deposit account-related disclosures and advertising as well as to
impose restrictions on federal reserve discount window advances for certain
institutions and to require that insured depository institutions generally be
examined on-site by federal or state personnel at least once every 12 months.
In connection with an institutional failure or FDIC rescue of a
financial institution, the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") grants to the FDIC the right, in many
situations, to charge its actual or anticipated losses against commonly
controlled depository institution affiliates of the failed or rescued
institution (although not against a bank holding company itself).
The nature of the banking and financial services industry, as well as
banking regulation, may be further affected by various legislative and
regulatory measures currently under consideration. The most important of such
measures include legislation designed to permit increased affiliations between
commercial and financial firms (including securities firms) and
federally-insured banks, reduce regulatory burdens on financial institutions and
eliminate or revise the features of the specialized savings association charter.
It is impossible to predict whether or in what form these proposals may be
adopted in the future and, if adopted, what the effect of their adoption will be
on the Zions or its subsidiaries.
Deposit Insurance and Other Assessments
Insured banks (including the bank subsidiaries of Zions) are required
to make quarterly deposit insurance assessment payments to the BIF, and most
savings associations to the SAIF, under a risk-based assessment system
established by the FDIC. (In addition, certain banks must also pay deposit
insurance assessments to the SAIF and certain savings associations, to the BIF
alone or to both funds.) Under this system, each institution's insurance
assessment rate is determined by
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<PAGE>
the risk assessment classification into which it has been placed by the FDIC.
The FDIC places each insured institution in one of nine risk assessment
classifications based upon its level of capital and supervisory evaluations by
its regulators: "well capitalized," "adequately capitalized" or "less than
adequately capitalized" institutions, with each category of institution divided
into subcategories of institutions which are either "healthy," of "supervisory
concern" or of "substantial supervisory concern." Those institutions deemed
weakest by the FDIC are subject to the highest assessment rates; those deemed
strongest are subject to the lowest assessment rates. The FDIC establishes
semi-annual assessment rates with the objective of enabling the affected
insurance fund to achieve or maintain a statutorily-mandated target reserve
ratio of 1.25% of insured deposits. In establishing assessment rates, the FDIC
Board of Directors is required to consider (i) expected operating expenses, case
resolution expenditures and income of the FDIC; (ii) the effect of assessments
upon members' earnings and capital; and (iii) any other factors deemed
appropriate by it.
Until June 30, 1997, both BIF- and SAIF-assessable deposits will be
subject to an assessment schedule providing for an assessment range of 0% to
.27% (with intermediate rates of .03%, .10%, .17% and .24%, depending upon an
institution's supervisory risk group).Both BIF and SAIF assessment rates are
subject to semi-annual adjustment by the FDIC Board of Directors within a range
of up to five basis points without public comment. The FDIC Board of Directors
also possesses authority to impose special assessments from time to time.
In addition to the payment of deposit insurance assessments, depository
institutions are required to make quarterly assessment payments to the FDIC on
both their BIF and SAIF assessable deposits which will be paid to the Financing
Corporation to enable it to pay interest and certain other expenses on bonds
which it issued pursuant to FIRREA to facilitate the resolution of failed
savings associations. Pursuant to the Federal Home Loan Bank Act, the Financing
Corporation, with the approval of the FDIC Board of Directors, establishes
assessment rates based upon estimates of (i) expected operating expenses, case
resolution expenditures and income of the Financing Corporation; (ii) the effect
of assessments upon members' earnings and capital; and (iii) any other factors
deemed appropriate by it. Additionally, the Financing Corporation is required to
assess BIF-assessable deposits at a rate one-fifth the rate applicable to
SAIF-assessable deposits until the first to occur of the merger of the BIF and
SAIF funds or January 1, 2000. Assessment rates for the first semi-annual period
of 1997 have been set at 1.30 basis points annually for BIF-assessable deposits
and 6.48 basis points annually for SAIF-assessable deposits.
Interstate Banking
Existing laws and various regulatory developments have allowed
financial institutions to conduct significant activities on an interstate basis
for a number of years. During recent years, a number of financial institutions
have expanded their out-of-state activities and various states and the Congress
have enacted legislation intended to allow certain interstate banking
combinations.
- 47 -
<PAGE>
The Riegle-Neal Act dramatically affects interstate banking activities.
As discussed previously, the Riegle-Neal Act allows the Federal Reserve Board to
approve the acquisition by a bank holding company of control or substantial
assets of a bank located outside the bank holding company's home state.
Beginning on June 1, 1997, and earlier if permitted by applicable state law, an
insured bank may apply to the appropriate federal agency for permission to merge
with an out-of-state bank and convert its offices into branches of the resulting
bank. States retain the option to prohibit out-of-state mergers if they enact a
statute specifically barring such mergers before June 1, 1997 and such law
applies equally to all out-of-state banks.
Interstate mergers authorized by the Riegle-Neal Act are subject to
conditions and requirements, the most significant of which include adequate
capitalization and management of the acquiring bank or bank holding company,
existence of the acquired bank for up to five years before purchase where
required under state law, and limitations on control by the acquiring bank
holding company of not more than 10% of the total amount of deposits in insured
depository institutions in the United States or not more than 30% of the
deposits in insured depository institutions within that state. States may impose
lower deposit concentration limits, so long as those limits apply to all bank
holding companies equally. Additional requirements placed on mergers include
conformity with state law branching requirements and compliance with "host
state" merger filing requirements to the extent that those requirements do not
discriminate against out-of-state banks or out-of-state bank holding companies.
The Riegle-Neal Act also permits banks to establish and operate a "de
novo branch" in any state that expressly permits all out-of-state banks to
establish de novo branches in such state, if the law applies equally to all
banks. (A "de novo branch" is a branch office of a national bank or state bank
that is originally established as a branch and does not become a branch as a
result of an acquisition, conversion, merger, or consolidation.) Utilization of
this authority is conditioned upon satisfaction of most of the conditions
applicable to interstate mergers under the Riegle-Neal Act, including adequate
capitalization and management of the branching institution, satisfaction with
certain filing and notice requirements imposed under state law and receipt of
federal regulatory approvals.
Pursuant to FIRREA, bank holding companies may acquire savings
associations (including savings and loan associations and federal savings banks)
without geographic restriction under the Bank Holding Company Act.
Bank holding companies whose home state is Utah are authorized to
acquire control of depository institutions and depository institution holding
companies located in other states. Colorado law authorizes, with the prior
approval of the Banking Board of the State of Colorado, out-of-state bank
holding companies to acquire bank holding companies whose operations are
principally conducted within the state irrespective of the number of years the
depository institution subsidiaries of the Colorado bank holding company have
been in operation provided that at the time of acquisition, the out-of-state
bank holding company will not control more than 25 percent of the aggregate
deposits made in federally-insured banks, savings and loan associations, federal
savings banks, industrial banks, bank holding companies, thrift holding
companies and industrial bank holding companies located in the state.
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<PAGE>
MONETARY POLICY
The earnings of Zions and Aspen are directly affected by the monetary
and fiscal policies of the federal government and governmental agencies. The
Federal Reserve Board has broad powers to expand and constrict the supply of
money and credit and to regulate the reserves which its member banks must
maintain based on deposits. These broad powers are used to influence the growth
of bank loans, investments and deposits, and may affect the interest rates which
will prevail in the market for loans and investments and deposits. Governmental
and Federal Reserve Board monetary policies have had a significant effect on the
operating results of commercial banks in the past and are expected to do so in
the future. The future impact of such policies and practices on the growth or
profitability of Zions and Aspen cannot be predicted.
INFORMATION CONCERNING ZIONS BANCORPORATION
Selected Financial Data
The following unaudited table of selected financial data should be read
in conjunction with the related notes included herein and Zions' consolidated
financial statements and the related notes thereto incorporated by reference
herein. See "Zions Documents Incorporated by Reference."
- 49 -
<PAGE>
ZIONS BANCORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share and ratio data)
<TABLE>
<CAPTION>
As of, and for the
Year Ended December 31,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Taxable-equivalent net interest income $ 267,583 $ 232,417 $ 203,313 $ 178,636 $ 160,854
Net interest income 260,473 227,094 198,606 174,657 157,282
Noninterest income 110,891 88,014 73,202 79,880 62,849
Provision for loan losses 3,540 2,800 2,181 2,993 10,929
Noninterest expenses (1) 214,332 190,030 174,900 167,750 139,069
Income taxes 52,142 40,950 30,900 27,248 22,924
Income before cumulative effect of changes
in accounting principles 101,350 81,328 63,827 56,546 47,209
Cumulative effect of changes in
accounting principles (2) - - - 1,659 -
Net income 101,350 81,328 63,827 58,205 47,209
COMMON STOCK DATA
Earnings per common share:
Income before cumulative effect of
changes in accounting principles $ 6.84 $ 5.53 $ 4.37 $ 3.96 $ 3.42
Net income 6.84 5.53 4.37 4.08 3.42
Dividends paid per share 1.70 1.41 1.16 .98 .75
Dividend payout ratio (%) 24.66% 25.27% 27.06% 21.81% 20.31%
Book value per share at year end 34.45 29.44 25.12 22.01 18.95
Market to book value at year end (%) 301.89% 272.59% 142.83% 168.11% 200.53%
Weighted average common and common
equivalent shares outstanding during the year 14,807,000 14,717,000 14,601,000 14,280,000 13,790,000
Common shares outstanding at year end 14,729,720 14,555,920 14,559,552 14,201,367 13,727,544
AVERAGE BALANCE SHEET DATA
Money market investments $ 909,470 $ 936,846 $ 869,709 $ 788,694 $ 469,062
Securities 1,827,300 1,632,253 1,545,704 1,209,165 927,976
Loan and leases, net 3,126,899 2,599,071 2,574,995 2,222,182 2,104,679
Total interest-earning assets 5,863,669 5,168,170 4,990,408 4,220,041 3,501,717
Total assets 6,377,695 5,658,690 5,456,613 4,643,918 3,807,832
Interest-bearing deposits 3,324,536 3,021,060 2,744,976 2,449,275 2,356,384
Total deposits 4,258,270 3,858,271 3,583,094 3,178,926 2,912,860
FHLB advances and other borrowings 96,496 114,270 151,164 195,097 128,856
Long-term debt 58,466 57,506 59,493 75,623 82,219
Total interest-bearing liabilities 4,872,070 4,320,229 4,197,865 3,556,746 2,962,079
Shareholders' equity 468,573 397,268 339,181 286,331 240,411
YEAR END BALANCE SHEET DATA
Money market investments $ 613,429 $ 687,251 $ 403,446 $ 597,680 $ 616,180
Securities 1,809,688 1,540,489 1,663,433 1,258,939 981,695
Loans and leases, net 3,452,543 2,806,956 2,391,278 2,486,346 2,107,433
Allowance for loan losses 69,954 67,555 67,018 68,461 59,807
Total assets 6,484,964 5,620,646 4,934,095 4,801,054 4,107,924
Total deposits 4,552,017 4,097,114 3,705,976 3,432,289 3,075,110
FHLB advances and other borrowings 87,194 101,084 127,319 288,249 205,222
Long-term debt 251,620 56,229 58,182 59,587 99,223
Shareholders' equity 507,452 428,506 365,770 312,592 260,070
</TABLE>
- 50 -
<PAGE>
<TABLE>
<CAPTION>
As of, and for the
Year Ended December 31,
----------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans $ 11,526 $ 7,438 $ 13,635 $ 23,364 $ 21,556
Restructured loans 857 249 567 4,006 4,003
Other real estate owned and other
nonperforming assets 138 1,609 4,741 3,267 5,971
Total nonperforming assets 12,521 9,296 18,943 30,637 31,530
Accruing loans past due 90 days or more 3,553 5,232 3,041 10,821 6,409
SELECTED RATIOS
Net interest margin (3) 4.56% 4.50% 4.07% 4.23% 4.59%
Return on average assets 1.59% 1.44% 1.17% 1.25% 1.24%
Return on average common equity 21.63% 20.47% 18.82% 20.33% 19.64%
Ratio of average common equity to average assets 7.35% 7.02% 6.22% 6.17% 6.31%
Tier I risk-based capital - year end 14.38% 11.38% 11.81% 10.85% 10.23%
Total risk-based capital - year end 18.31% 14.23% 14.96% 14.12% 15.13%
Leverage ratio - year end 8.77% 6.28% 6.24% 5.44% 6.21%
Ratio of nonperforming assets to total
assets - year end .19% .17% .38% .64% .77%
Ratio of nonperforming assets to net loans and
leases and other real estate owned and
other nonperforming assets at year end .36% .33% .79% 1.23% 1.49%
Ratio of net charge-offs (recoveries) to average
loans and leases .12% .10% .19% (.23)% .44%
Ratio of allowance for loan losses to net loans
and leases outstanding at year end 2.03% 2.41% 2.80% 2.75% 2.84%
Ratio of allowance for loan losses to
nonperforming loans at year end 564.92% 878.82% 471.89% 250.13% 234.00%
</TABLE>
(1) Noninterest expenses for the year ended December 31, 1993 included a
one-time expense of $6,022,000 in the first quarter of 1993, related to
the early extinguishment of debt which was necessitated by the decision in
March 1993, to notify holders of floating rate notes totaling $37,450,000
and industrial revenue bonds totaling $4,720,000 that the debt would be
redeemed during the second quarter of 1993. The expense consisted of
marking to market an interest rate exchange agreement entered into several
years ago in conjunction with the issuance of the floating rate notes and
writing off deferred costs associated with the notes and bonds. Early
redemption of the bonds and notes in the second quarter of 1993, allowed
Zions Bancorporation to avail itself of lower cost funding.
(2) Cumulative effect of changes in accounting principles for the year ended
December 31, 1993 resulted from the cumulative effect of changes in
accounting principles in the first quarter of 1993, arising from the
adoption as of January 1, 1993, of Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions," and SFAS No. 109, "Accounting for Income
Taxes." The election of immediate recognition of the cumulative effect
(transition obligation) of such change in accounting method for
postretirement benefit other than pensions of SFAS No. 106 decreased
pretax and after-tax net income by $5,760,000 and $3,631,000,
respectively. In addition to the $2,129,000 deferred tax benefit resulting
from the adoption of SFAS No. 106, the election to apply SFAS No. 109
prospectively and not restate prior years resulted in net deferred tax
benefits of $5,290,000 for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of
other assets and liabilities.
(3) Net interest margin represents net interest income on a taxable-equivalent
basis as a percentage of average earning assets.
- 51 -
<PAGE>
Stock Prices and Dividends on Zions Common Stock
Zions Common Stock is traded in the over-the-counter market under the
symbol "ZION" and is listed in the NASDAQ National Market System. The following
table sets forth the high and low bid quotations for Zions Common Stock for the
periods indicated, in each case as reported by NASDAQ, and the cash dividends
per share declared on Zions Common Stock for such periods. Such over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Quarterly Bid
Price Range Cash
--------------------- Dividends
High Low Declared
---- --- --------
<S> <C> <C> <C>
1994
First Quarter........................... $ 39.75 $ 36.50 $ .28
Second Quarter.......................... 42.00 37.00 .28
Third Quarter........................... 40.63 38.50 .30
Fourth Quarter.......................... 39.25 33.50 .30
-----
$1.16
=====
1995
First Quarter........................... $ 40.50 $ 35.50 $ .30
Second Quarter.......................... 50.00 38.13 .35
Third Quarter........................... 61.50 49.50 .35
Fourth Quarter.......................... 81.13 60.88 .41
-----
$1.41
=====
1996
First Quarter........................... $ 79.25 $ 66.75 $ .41
Second Quarter ......................... 79.00 68.00 .41
Third Quarter........................... 89.75 72.00 .44
Fourth Quarter.......................... 104.00 87.75 .44
-----
$1.70
=====
1997
First Quarter........................... $133.00 $102.75 $ .44
Second Quarter
(through April 11, 1997).............. $118.13 $115.00 $ --
</TABLE>
On November 18, 1996, the last NASDAQ-NMS trading day prior to the
public announcement of the Reorganization, the closing sale price for the Zions
Common Stock was $89.00. On April 11, 1997, the last trading date before this
Proxy Statement/Prospectus was sent to the printers, the closing sale price for
the Zions Common Stock was $115 1/8. On March 5, 1997, there were 14,554,661
shares of Zions Common Stock outstanding, held by approximately 3,889
shareholders of record.
While Zions is not obligated to pay cash dividends, Zions' Board of
Directors presently intends to continue the policy of paying quarterly cash
dividends. Future dividends will depend, in part, upon the earnings and
financial condition of Zions.
- 52 -
<PAGE>
Principal Holders of Zions Common Stock
The following table sets forth as of February 24, 1997, the record and
beneficial ownership of Zions Common Stock by the principal common shareholders
of Zions.
<TABLE>
<CAPTION>
No. of % of
Name and Address Type of Ownership Shares Class
- ---------------- ----------------- ------ -----
<S> <C> <C> <C>
Roy W. Simmons Record and Beneficial 569,203 3.90%
One South Main Street Beneficial(1) 497,844 3.42%
Salt Lake City, Utah 84111 --------- ----
1,067,047 7.32%
Zions First National Bank Record(2) 1,128,003 7.74%
One South Main Street
Salt Lake City, Utah 84111
</TABLE>
- ---------------------
(1) Represents Roy W. Simmons' ownership interest in 497,844 shares held by
a company in which Mr. Simmons serves as a director.
(2) These shares are owned of record as of February 24, 1997, by Zions
First National Bank, a subsidiary of Zions, in its capacity as
fiduciary for various trust and advisory accounts. Of the shares shown,
Zions First National Bank has sole voting power with respect to a total
of 799,344 shares (5.48% of the class) it holds as trustee for the
Zions Bancorporation Employee Stock Savings Plan, the Zions
Bancorporation Employee Investment Savings Plan, and the Zions
Bancorporation Profit Sharing Plan. Zions First National Bank also acts
as trustee for the Zions Bancorporation Dividend Reinvestment Plan,
which holds 253,689 shares (1.74% of the class) and the Zions
Bancorporation PAYSOP Plan, which holds 74,970 shares (.52% of the
class) as to which Zions First National Bank does not have or share
voting power.
Set forth below is the beneficial ownership, as of February 24, 1997,
of Zions' common stock by each of Zions' directors, and all directors and
officers as a group.
No. of Shares % of
Directors Beneficially Owned Class
- --------- ------------------ -----
Jerry C. Atkin 1,950 * (1)
R.D. Cash 6,250 * (1)
Grant R. Caldwell 1,250 * (1)
Richard H. Madsen 49,905 * (1)
Roger B. Porter 250 * (1)
Robert G. Sarver 103,210 * (1)
Harris H. Simmons 580,895(2) 3.98
- 53 -
<PAGE>
L. E. Simmons 535,581(2) 3.67
Roy W. Simmons 1,067,047(2) 7.32
I. J. Wagner 70,750(2) * (1)
Dale W. Westergard 40,438 * (1)
All directors and officers
as a group 1,869,679 12.75
(32 persons)
- --------------------------
(1) Immaterial percentage of ownership.
(2) Totals include 497,844 shares attributed to each individual through
serving as a director in a company holding such shares in Zions. Of
such 497,844 shares attributed to Harris H. Simmons, Mr. Simmons holds
an option to acquire 46,698 shares, all of which are vested and
presently exercisable.
Zions Documents Incorporated By Reference
The following documents previously filed by Zions with the SEC pursuant
to the Exchange Act are hereby incorporated by reference in this Proxy
Statement/Prospectus:
1. Zions' Annual Report on Form 10-K for the year ended December
31, 1995 ("Zions Form 10-K"); and
2. Zions' Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996, and September 30, 1996;
3. Zions' current reports on Form 8-K filed on October 11, 1996,
December 30, 1996, and March 11, 1997; and
4. Zions' Form 8-A Registration Statement dated October 10, 1996.
For the convenience of Aspen shareholders, a copy of Zions' Form 8-K
filed with the SEC on March 11, 1997 is being mailed to Aspen shareholders along
with this Proxy Statement/Prospectus. The Form 8-K contains Zions' audited
consolidated financial statements as of December 31, 1996 and 1995 and for each
of the years in the three-year period ended December 31 1996, as well as its
Management's Discussion and Analysis of Changes in Financial Condition and
Results of Operations and Guide 3 information (Statistical Disclosure by Bank
Holding Companies) related thereto. Aspen shareholders who wish to obtain copies
of any Zions document incorporated by reference herein may do so by following
the instructions under "Available Information" above.
All documents filed by Zions with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the Effective Date shall be deemed to be
incorporated by reference in this Proxy Statement/Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
- 54 -
<PAGE>
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement/Prospectus.
INFORMATION CONCERNING ASPEN BANCSHARES, INC.
Aspen Bancshares, Inc., ("Aspen") is a bank holding company whose
principal assets are the common stock of Pitkin County Bank and Trust Co.
("Pitkin"), a commercial bank organized in 1979, the common stock of Centennial
Savings Bank, F.S.B. ("Centennial"), a thrift originally created in 1905 and
acquired by Aspen in 1993, and the common stock of Val Cor Bancorporation, Inc.,
a bank holding company whose principal asset is Valley National Bank of Cortez,
Colorado, which Aspen acquired in June 1996. At December 31, 1996, Aspen had
total assets of $450.61 million, total deposits of $398.87 million, and total
shareholders' equity of $31.1 million. Aspen was incorporated under Colorado law
on July 24, 1987 and became a registered bank holding company through the
ownership of Pitkin on June 30, 1988.
Pitkin, with its main branch in Pitkin County, Colorado, offers
traditional banking services designed to serve the permanent community in its
primary service area. A bank's "primary service area" is the geographic location
from where it expects to originate a large majority of its deposits. Pitkin's
primary service area is Aspen, Snowmass and surrounding communities. Pitkin also
has full-service branch located in El Jebel, Colorado, in Eagle County and a
branch in Telluride, Colorado in San Miguel County. Pitkin also offers special
services intended to meet the needs of large deposit customers who are not
year-round residents. To attract these large depositors, Pitkin established a
concierge service ("Club 534") for customers maintaining a $50,000 minimum
deposit balance. Club 534 provides highly personalized services such as making
restaurant and hotel reservations, recommending catering services, hosting
varied seasonal parties, and arranging house cleaning and home maintenance.
Pitkin was chartered as a Colorado state bank in 1979. Its primary office is at
534 E. Hyman Avenue, Aspen, Colorado 81611. At December 31, 1996, Pitkin had
total deposits of $152.0 million and shareholders' equity of $10.8 million.
On October 6, 1993, Aspen acquired all of Centennial's outstanding
common stock. As a result of its acquisition of Centennial, Aspen became a
savings and loan holding company pursuant to the Home Owners' Loan Act of 1933,
as amended, as well as remaining a bank holding company by reason of its
ownership of Pitkin. Centennial is the largest thrift institution and the second
largest financial institution headquartered in Western Colorado. Centennial's
primary market areas is defined as the Counties of La Plata, Montezuma,
Archuleta, Montrose and Mesa, Colorado and San Juan County, New Mexico.
Centennial was originally chartered by the State of Colorado in 1905 under the
name "Durango Savings and Building Association." In February 1984 Centennial
converted from a Colorado chartered savings and loan association to a federally
chartered savings and loan association, and on June 11, 1984, Centennial
converted to a capital stock savings bank. Centennial's primary business is the
solicitation of savings accounts from its depositors and the general public and
the promotion of home ownership through the granting of mortgage loans primarily
to finance the
- 55 -
<PAGE>
purchase, construction or improvement of residential real estate located within
the State of Colorado and San Juan County, New Mexico. Centennial also invests
in federal government and agency obligations and other investment securities. At
December 31, 1996, Centennial had total assets of $206.1 million, total deposits
of $178.6 million, and shareholders' equity of $14.0 million.
Centennial's main office is located at 1101 Second Avenue, Durango,
Colorado. The phone number at that office is (970) 247-4183. Centennial also
conducts its business through its six other branch offices located in Cortez,
Pagosa Springs, Dolores, Montrose, and Grand Junction, Colorado and Farmington,
New Mexico.
In June 1996, Aspen acquired Val Cor Bancorporation, Inc., a Colorado
corporation ("Val Cor"). Val Cor is a registered bank holding company whose
principal asset is over 99% of the common stock of Valley National Bank of
Cortez, Colorado ("Valley"), a national banking association organized in 1979.
Valley offers traditional banking services to customers in its primary market
area of Montezuma County, Colorado. Valley's and Val Cor's main office is
located at 350 W. Montezuma, Cortez, Colorado. The phone number at that office
is (970) 565-4411. Valley also conducts business through its two branch offices
located in Cortez and Dolores, Colorado. At December 31, 1996, Val Cor had total
assets of $80.2 million, total deposits of $68.8 million, and shareholders'
equity of $11.2 million.
Services. Aspen offers a full range of financial services to commercial
and individual customers, including a wide variety of commercial loans,
revolving credit facilities, construction lending, mortgage loans, Small
Business Administration loans, checking accounts, various savings programs,
certificates of deposit, debit, credit and ATM cards, safe deposit and night
depository facilities, walk-in and drive-up teller facilities, electronic
banking and banking by telephone.
Contingencies. At December 31, 1996, Pitkin owned 70.2% of the total
capital stock of Thatcher Financial Group, Inc. ("TFG"). Pitkin acquired the
stock at sale of the collateral on a loan made by Pitkin. TFG's primary asset
was 100% of the common stock of Thatcher Bank, F.S.B. ("Thatcher Bank"). Pitkin
also had a loan collateralized by the stock of Thatcher Bank and an art
collection. During 1993, Pitkin sold the stock of Thatcher Bank and part of the
art collection. Proceeds from the sales were used to satisfy outstanding loan
principal, interest and expenses related to the loans made by Pitkin. Directors
of TFG, who are parties related to Pitkin, are in the process of determining
outstanding liabilities, including possible federal and state income taxes
payable. After determination and payment of outstanding liabilities of TFG, TFG
directors plan to distribute the remaining funds, if any, to the shareholders of
TFG. There is no determination as to when this can be accomplished. Pitkin has
not recorded any receivable with respect to its ownership of TFG stock. At
December 31, 1996, TFG has assets, primarily cash and investments, of
approximately $1,000,000 (unaudited).
See "Selected Financial Data," "Management's Discussion and Analysis,"
"Consolidated Financial Statements," and "Statistical Information" for
additional information concerning the business of Aspen.
- 56 -
<PAGE>
Selected Financial Data
The following selected financial data should be read in conjunction
with Aspen's consolidated financial statements and the related notes and with
Aspen's management's discussion and analysis of financial condition and results
of operations, incorporated herein by reference.
- 57 -
<PAGE>
ASPEN BANCSHARES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
As of, and for the
Year Ended December 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
(Dollars and outstanding shares in thousands,
except per share and ratio data)
EARNINGS SUMMARY
Net interest income $17,330 $15,594 $14,027 $8,280 $5,182
Provision for loan losses 145 36 56 835 503
Noninterest income 2,274 2,489 1,790 1,075 1,132
Noninterest expense 13,408 10,840 9,628 4,623 3,030
Net income 4,086 4,683 4,048 2,565 1,747
COMMON STOCK DATA
Earnings per common share (fully diluted) $1.07 $1.25 $1.08 $0.80 $0.59
Book value per share at period end 8.36 7.00 5.36 5.01 4.30
Weighted average common and common
equivalent shares outstanding during
the period (primary) 3,603 3,093 3,064 3,033 2,966
Common shares outstanding at period end (fully diluted) 3,835 3,735 3,740 3,214 2,966
AVERAGE BALANCE SHEET DATA
Securities $ 59,734 $ 58,576 $ 66,850 $ 36,488 $ 25,050
Loans and leases, net 305,091 261,408 243,264 123,347 72,384
Total interest-earning assets 380,732 322,758 317,626 168,910 102,628
Total assets 406,223 342,622 334,760 178,142 108,189
Interest-bearing deposits 311,255 252,388 256,536 130,018 72,622
Total deposits 349,458 281,877 285,335 152,135 90,598
Long-term debt 19,216 30,859 15,093 7,582 5,431
Shareholders' equity 29,783 25,957 22,099 15,188 11,982
END OF PERIOD BALANCE SHEET DATA
Securities $ 78,170 $ 42,183 $ 64,301 $ 53,672 $ 26,078
Loans and leases, net 321,934 254,992 262,154 214,314 85,782
Allowance for loan losses 3,217 2,197 2,178 2,074 667
Total assets 450,606 349,123 349,563 324,539 142,262
Total deposits 398,874 300,017 283,557 284,022 121,331
Long-term debt 15,975 16,285 17,636 8,400 5,400
Shareholders' equity 31,101 27,298 22,335 21,358 12,782
Nonperforming assets:
Nonaccrual loans 823 -- 300 419 963
Other real estate owned -- -- -- 189 157
Total nonperforming assets 1,992 1,260 468 707 1,405
SELECTED RATIOS
Net interest margin 4.55% 4.83% 4.42% 4.90% 5.11%
Return on average assets 1.01% 1.37% 1.21% 1.44% 1.61%
Ratio of average common equity to
average assets 6.90% 6.17% 4.66% 7.67% 11.08%
Ratio of nonperforming assets to total
assets 0.44% 0.36% 0.13% 0.22% 0.99%
Ratio of allowance for loan losses to
net loans and leases outstanding at
period end 1.0% 0.9% 0.8% 1.0% 0.8%
Ratio of allowance for loan losses to
nonperforming loans 161.5% 174.4% 465.4% 400.4% 53.4%
</TABLE>
- 58 -
<PAGE>
Stock Prices and Dividends on Aspen Common Stock
Aspen Common Stock is traded in the over-the-counter market under the
symbol "ASBK" and is listed in the NASDAQ National Market System. The following
table sets forth the high and low sales quotations for Aspen Common Stock for
the periods indicated, in each case as reported by NASDAQ-NMS, and the cash
dividends per share declared on Aspen Common Stock for such periods. Such
over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Quarterly Sales
Price Range Cash
-------------------- Dividends
High Low Declared
---- --- --------
<S> <C> <C> <C>
1994
First Quarter........................... $12.80 $10.08 $ .04
Second Quarter.......................... 14.08 9.28 .04
Third Quarter........................... 12.32 9.60 .04
Fourth Quarter.......................... 11.60 8.60 .04
-----
$ .16
=====
1995
First Quarter........................... $11.80 $ 8.80 $ .05
Second Quarter.......................... 13.40 11.20 .05
Third Quarter........................... 14.40 12.70 .05
Fourth Quarter.......................... 14.88 11.50 .05
-----
$0.20
=====
1996
First Quarter........................... $17.25 $13.25 $ .05
Second Quarter ......................... 16.50 15.00 .05
Third Quarter........................... 19.75 15.75 .05
Fourth Quarter.......................... 20.00 17.63 .05
-----
$0.20
=====
1997
First Quarter........................... $23.13 $18.50 $ .04
Second Quarter
(through April 11, 1997).............. 21.25 19.50 --
</TABLE>
On November 18, 1996, the last NASDAQ-NMS trading day prior to the
public announcement of the Reorganization, the closing sale price for the Aspen
Common Stock was $18.75. On April 11, 1997, the last trading date before this
Proxy Statement/Prospectus was sent to the printers, the closing sale price for
the Aspen Common Stock was $21.00. On March 12, 1997, there were approximately
3,720,780 shares of Aspen Common Stock outstanding, held by approximately 238
shareholders of record.
Stockholdings of Directors, Officers and Certain Others
Persons who were beneficial owners of 5% or more of the issued and
outstanding Aspen Common Stock as of the record date are shown in the following
table:
- 59 -
<PAGE>
Amount and
Nature of
Name of Beneficial Percent of
Beneficial Owner Ownership(2) Common Stock
- ---------------- --------- ------------
Morton A. Heller(1) 355,782 9.03%
Charles B. Israel(1) 271,107 6.88%
B. John Barry 547,044 13.89%
P.O. Box 1950
Aspen, CO 81612
James McDade 254,087 6.45%
6515 N. Ventana Canyon Drive
Tucson, AZ 85715
- --------------------------
(1) The address of each named individual is that of Aspen.
(2) The table includes, when applicable, any shares owned of record by such
person's minor children and spouse, and by other individuals and
entities over whose shares such person has custody, voting control, or
power of disposition. The number of shares shown includes stock options
exercisable by such persons within 60 days of the record date.
As of the record date, Aspen's directors and executive officers as a
group were beneficial owners of that number of shares of Common Stock shown
below.
Amount of
and Nature of
Name of Beneficial Percent of
Beneficial Owner Ownership(1) Common Stock
- ---------------- ------------- ------------
J. Thomas Clark 78,250 1.99%
Morton A. Heller 355,782 9.03%
Charles B. Israel 271,107 6.88%
Carol Ann Kopf 39,874 1.01%
Robert R. Oden, M.D. 57,062 1.45%
Christopher L. Tolk 26,624 0.68%
All Executive Officers and 837,333 21.25%
Directors as a group (8
persons)
- -----------------------
(1) The table includes, when applicable, shares owned of record by such
person's minor children and spouse, and by other related individuals
and entities over whose shares such person has custody, voting control,
or power of disposition. The number of shares shown includes stock
options exercisable by such persons within 60 days of the record date.
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<PAGE>
Aspen Documents Incorporated by Reference
The following documents previously filed by Aspen with the SEC pursuant
to the Exchange Act are hereby incorporated by reference in this Proxy
Statement/Prospectus:
1. Aspen's Annual Report on Form 10-K for the year ended December
31, 1995 ("Aspen Form 10-K");
2. Aspen's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996, and September 30, 1996;
3. Aspen's Current Reports on Form 8-K filed on June 18, 1996,
November 19, 1996, and March 7, 1997;
4. Aspen's Form 8-A Registration Statement dated June 20, 1991; and
5. The following portions of Aspen's 1995 Annual Report to
Shareholders ("Aspen Annual Report"):
(a) "Financial Highlights" on the inside front cover of
the Aspen Annual Report; and
(b) "Selected Quarterly Financial Data" on page 7.
For the convenience of Aspen shareholders, a copy of Aspen's Form 8-K
filed with the SEC on March 7, 1997 is being mailed to Aspen shareholders along
with this Proxy Statement/Prospectus. The Form 8-K contains Aspen's audited
financial statements, including its Management's Discussion and Analysis of
Changes in Financial Condition and Results of Operations and Guide 3 information
(Statistical Disclosure by Bank Holding Companies), for the year ended December
31, 1996. Other than expressly incorporated herein by reference into this Proxy
Statement/Prospectus (as specified above), no portions of the Aspen Annual
Report are to be deemed part of this Proxy Statement/Prospectus. Aspen
shareholders who wish to obtain copies of any Aspen document incorporated by
reference herein may do so by following the instructions under "Available
Information" above.
All documents filed by Zions with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the Effective Date shall be deemed to be
incorporated by reference in this Proxy Statement/Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement/Prospectus.
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<PAGE>
COMPARISON OF ZIONS COMMON STOCK AND ASPEN COMMON STOCK
General
Upon consummation of the Reorganization, shareholders of Aspen will
become shareholders of Zions, a Utah corporation. Thus, the Utah Revised
Business Corporation Act and Zions' Articles of Incorporation ("Articles") and
Bylaws will govern the rights of the Aspen shareholders who become shareholders
of Zions. In addition, since the Articles and Bylaws of Zions and Aspen are not
the same, the Reorganization will result in certain differences in the rights of
the holders of Aspen Common Stock. The following is a summary of certain of the
more significant differences.
Voting Rights
General. The holders of Zions Common Stock like the holders of Aspen
Common Stock (except as stated below), are generally entitled to one vote for
each share held of record on all matters submitted to a shareholder vote. The
holders of Zions Common Stock and Aspen Common Stock do not have cumulative
voting rights. The absence of cumulative voting means that a nominee for
director must receive the votes of a plurality of the shares voted in order to
be elected.
Special Votes for Certain Transactions. The Articles of Zions contain
provisions requiring special shareholder votes to approve certain types of
transactions. In the absence of these provisions, either the transactions would
require approval by a majority of the shares voted at a meeting or no
shareholder vote would be required.
Zions' Articles require that certain "business transactions" between
Zions or a subsidiary and a "related person" be approved by the affirmative
votes of the holders of not less than 80% of the voting power of all outstanding
voting stock of Zions. A "related person" is generally defined by Zions'
Articles to mean a person, corporation, partnership, or group acting in concert
that beneficially owns 10% or more of the voting power of Zions' outstanding
voting stock.
The "business transactions with a related person" subject to Zions'
special vote requirements include (1) a merger or consolidation involving Zions
or a subsidiary of Zions with a related person; (2) the sale, lease, exchange,
transfer or other disposition of all or any substantial part of the assets of
either Zions or a subsidiary of Zions to, with or for the benefit of a related
person; (3) the issuance, sale, exchange or other disposition by Zions or a
subsidiary of Zions to a related person of securities of Zions or a subsidiary
of Zions having an aggregate fair market value of $5 million or more; (4) any
liquidation, spinoff, splitoff, splitup, or dissolution of Zions by or on behalf
of a related person; (5) any recapitalization or reclassification of the
securities of Zions or other transaction that would have the effect of
increasing the voting power of a related person or reducing the number of shares
of each class of voting securities outstanding; and (6) any agreement, contract,
or other arrangement providing for any of the transactions set forth above.
Zions' special shareholder vote requirements for business transactions
with related persons do not apply to any transaction approved by a majority of
the
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<PAGE>
"continuing directors" or if various specified conditions are met. A continuing
director is any member of the Zions Board who is not a related person or an
interested shareholder or an affiliate or associate of a related person and who
(1) was a director on February 21, 1986 or (2) became a director subsequent to
that date and whose election or nomination for election by Zions' shareholders
was approved by a majority of the continuing directors then on the Board.
Aspen's Articles and Bylaws have no similar provision.
Shareholder Rights Plan
The Board of Directors of Zions in September 1996 adopted a Shareholder
Protection Rights Plan and declared a dividend of one Right on each outstanding
share of Zions Common Stock. The Rights Plan was not adopted in response to any
specific effort to acquire control of Zions. Rather, it was adopted to deter
abusive takeover tactics that can be used to deprive shareholders of the full
value of their investment.
Until it is announced that a person or group has acquired 10% or more
of Zions Common Stock (an "Acquiring Person") or commences a tender offer that
will result in such person or group owning 10% or more of Zions Common Stock,
the Rights will be evidenced by the Common Stock certificates, will
automatically trade with the Common Stock and will not be exercisable.
Thereafter, separate Rights certificates will be distributed and each Right will
entitle its holder to purchase Participating Preferred Stock having economic and
voting terms similar to those of one share of Common Stock for an exercise price
of $360.00.
Upon announcement that any person or group has become an Acquiring
Person, then 10 days thereafter (or such earlier or later date as the Board may
decide) (the "Flip-in Date") each Right (other than Rights beneficially owned by
any Acquiring Person or transferees thereof, which Rights become void) will
entitle its holder to purchase, for the exercise price, a number of shares of
Zions Common Stock or Participating Preferred Stock having a market value of
twice the exercise price.
Also, if after an Acquiring Person controls Zions' Board of Directors
Zions is involved in a merger or sells more than 50% of its assets or earning
power (or has entered an agreement to do any of the foregoing) and, in the case
of a merger, the Acquiring Person will receive different treatment than all
other shareholders or the Person with whom the merger occurs is the Acquiring
Person or a person affiliated or associated with the Acquiring Person, each
Right will entitle its holder to purchase, for the exercise price, a number of
shares of common stock of the Acquiring Person having a market value of twice
the exercise price. If any person or group acquires between 10% and 50% of the
Zions Common Stock, Zions' Board of Directors may, at its option, exchange one
share of Zions Common Stock for each Right.
The Rights may be redeemed by the Board of Directors for $0.01 per
Right prior to the Flip-in Date.
Board of Directors
Director Liability. Zions' Articles contain a "director liability"
provision. This provision generally shields a director from monetary damages to
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<PAGE>
the corporation or its shareholders for a breach of fiduciary duty as a director
other than (i) a breach of a director's duty of loyalty, (ii) acts or omissions
not taken in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) authorizing the unlawful payment of dividends, and (iv)
transactions in which a director receives an improper benefit.
Colorado law provides that a corporation's articles of incorporation
may set forth a provision that eliminates or limits the liability of a director
to the corporation for money damages for any action taken or any failure to take
any action as a director, except that any such provision shall not eliminate or
limit the liability of a director to the corporation or to its shareholders for
monetary damages for any breach of the director's duty of loyalty to the
corporation or to its shareholders, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, acts specified in
section 7-108-403, or any transaction from which the director directly or
indirectly derived an improper personal benefit. Aspen's Articles contain a
provision that eliminates director liability to the corporation as provided for
by Colorado law.
Classified Board. Zions' Articles divide the Board of Directors into
three classes, each consisting of one-third (or as near as may be) of the whole
number of the Board of Directors. Utah law requires that each class contain as
equal a number of directors as possible. One class of directors is elected at
each annual meeting of shareholders, and each class serves for a term of three
years.
The number of directors which constitute Zions' full Board of Directors
may be increased or decreased only by amendment of the Bylaws, which requires
the affirmative vote of two-thirds of the total number of directors constituting
the entire Board, or by the shareholders of Zions at a regular or special
meeting by the affirmative vote of two-thirds of the outstanding and issued
shares entitled by statute to vote. Except as otherwise required by law,
vacancies on Zions' Board of Directors, including vacancies resulting from an
increase in the size of the Board, may be filled by the affirmative vote of a
majority of the remaining directors even though less than a quorum of the Board
of Directors. Zions' directors elected by the Board to fill vacancies serve for
the full remainder of the term of the class to which they have been elected. Any
directorship filled by reason of an increase in the number of directors may be
filled for a term of office continuing only until the next election of directors
by the shareholders.
Aspen's Articles and Bylaws do not provide for a classified Board of
Directors. Instead, Aspen's Bylaws provide for a Board of Directors consisting
of not less than three individuals, who are to be elected annually. Aspen's
bylaw provisions governing vacancies are similar to Zions'.
Removal of Directors. Zions' Articles provide that any director (or the
entire Board of Directors) may be removed from office by shareholder vote only
if such removal is approved by the holders of two-thirds of the issued and
outstanding shares then entitled to vote at an election of directors.
Aspen's Bylaws provide that, at a meeting of shareholders called
expressly for that purpose, any or all directors may be removed with or without
cause only if the number of votes cast in favor of removal exceeds the number of
votes cast against removal.
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<PAGE>
Shareholder Meetings
Utah law provides that special meetings of a corporation's shareholders
may be called by the board of directors or such other persons authorized by the
bylaws to call a special meeting or by the holders of at least ten percent of
all the votes entitled to be cast on any issue proposed to be considered at the
special meeting. Under Zions' Bylaws, special meetings may be called by the
president or by the Board of Directors.
Under Aspen's Bylaws, special meetings of shareholders may be called by
the president, a vice president, the Board of Directors, or holders of not less
than one-tenth of all shares entitled to vote at the meeting.
Amendment of Articles and Bylaws
Zions' Articles require the affirmative votes of the holders of
two-thirds of all outstanding voting stock of Zions to approve any amendment to
Zions' Articles, except that to repeal or amend the provisions in the article
regarding business transactions with related persons requires the affirmative
vote of 80% of the issued and outstanding stock entitled to vote. Zions' Bylaws
may be amended by an affirmative vote of two-thirds of the total number of
directors constituting the entire Board or by the affirmative vote of two-thirds
of the issued and outstanding shares entitled to vote.
Under Colorado law, Aspen's Articles may be amended at an annual or
special shareholder meeting by an affirmative majority vote of all votes cast.
Aspen's Bylaws provide that they may be amended by the affirmative vote of a
majority of the Board of Directors at a meeting called for that purpose or by
the unanimous consent of the Board.
Dissenters' Rights
Zions is incorporated under the laws of Utah. Utah law provides for
dissenters' rights in a variety of transactions including: (i) any plan of
merger to which a corporation is a party (other than mergers or consolidations
not requiring a shareholder vote); (ii) certain sales, leases, exchanges or
other dispositions of all or substantially all of the assets of a corporation;
and (iii) certain share exchanges. However, shareholders of a Utah business
corporation are not entitled to dissenters' rights in any of the transactions
mentioned above if their stock is either listed on a national securities
exchange or on the National Market System of NASDAQ or held of record by 2,000
or more shareholders. The aforementioned provisions do not apply if the
shareholder will receive for his shares anything except (a) shares of the
corporation surviving the consummation of the plan of merger or share exchange,
(b) shares of a corporation whose shares are listed on a national securities
exchange or the National Market System of NASDAQ or held of record by not less
than 2,000 holders, or (c) cash in lieu of fractional shares. Zions Common Stock
currently is listed for trading in the National Market System of NASDAQ and has
more than 2,000 shareholders of record.
Aspen is incorporated under the laws of Colorado. Colorado law provides
that any shareholder of a Colorado corporation shall have the right to dissent
from any of the following corporate actions in which such shareholder is
entitled to vote: (1) consummation of a plan of merger to which the corporation
is a
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<PAGE>
party if either (i) shareholder approval is required by Colorado Revised
Statutes ss. 7-111-103 or ss. 7-111-104 or the corporation's articles or (ii)
the corporation is a subsidiary that is merged with its parent under Colorado
Revised Statutes ss. 7-111-104; (2) consummation of a sale, exchange or other
disposition of all, or substantially all, of the property of the corporation not
made in the usual and regular course of business; (3) consummation of a plan of
share exchange to which the corporation is a party as the corporation whose
shares will be acquired.
Shareholders of a Colorado corporation are not entitled to dissent from
a plan of merger if the shares held by the shareholders are part of a class or
series of shares registered on a national securities exchange, were listed on
the national market system of NASDAQ or were held of record by at least 2,000
shareholders on the date fixed to determine the shareholders entitled to vote on
the proposed corporate action. Aspen's common stock is listed on NASDAQ-NMS. As
a result, shareholders of Aspen are not entitled to exercise any rights of
dissenting shareholders under Colorado law.
Preferred Stock
Zions' Articles authorize Zions to issue up to 3,000,000 shares of
Zions preferred stock, no par value.
The authorized shares of preferred stock are issuable in one or more
series on the terms set by the resolution or resolutions of the Board of
Directors of Zions providing for the issuance thereof. Each series of preferred
stock would have such dividend rate, which might or might not be cumulative,
such voting rights, which might be general or special, and such liquidation
preferences, redemption and sinking funds provisions, conversion rights or other
rights and preferences, if any, as the Board of Directors may determine. Except
for such rights as may be granted to the holders of any series of preferred
stock in the resolution establishing such series or as required by law, all of
the voting and other rights of the shareholders of Zions belong exclusively to
the holders of common stock.
Zions has reserved 160,000 shares of Participating Preferred Stock for
issuance upon exercise of the Rights under Zions' Shareholder Rights Plan.
Aspen's Articles authorize the issuance of 5,000,000 shares of
preferred stock, par value $.01 per share. No shares of preferred stock are
currently outstanding. The rules requiring issuance of shares of Aspen preferred
stock are similar to the sales governing Zions' issuance of preferred stock. A
Colorado corporation must file with the Secretary of State a certificate of
designation of relative rights and preferences with respect to the issuance of
preferred stock.
Dividend Rights
Utah law generally allows a corporation, subject to restrictions in its
certificate of incorporation, to declare and pay dividends in cash or property,
but only if the corporation is solvent and payment would not render the
corporation insolvent. Zions' Articles place no further restrictions on
distributions. Thus, the holders of Zions Common Stock are entitled to dividends
when, as and if declared by their Board of Directors out of funds legally
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<PAGE>
available therefor. However, if Zions preferred stock is issued, the Board of
Directors of Zions may grant preferential dividend rights to the holders of such
stock which would prohibit payment of dividends on Zions Common Stock unless and
until specified dividends on the preferred stock had been paid.
Colorado law prohibits corporations from paying dividends when, after
giving the dividend effect, the corporation would not be able to pay its debts
as they become due in the usual course of business or the corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those of the shareholders
receiving the distribution.
Liquidation Rights
Upon liquidation, dissolution or winding up of Zions, whether voluntary
or involuntary, the holders of Zions Common Stock are entitled to share ratably
in the assets of the corporation available for distribution after all
liabilities of the corporation have been satisfied. However, if preferred stock
is issued by Zions, the Board of Directors may grant preferential liquidation
rights to the holders of such stock which would entitle them to be paid out of
the assets of Zions available for distribution before any distribution is made
to the holders of Zions Common Stock.
The rights of the holders of Aspen Common Stock in the event of a
liquidation are substantially similar to those applicable to Zions shareholders.
Under Colorado law, upon dissolution or liquidation by a court, after all
liabilities and obligations of the corporation have been satisfied, any
remaining assets or proceeds shall be distributed among its shareholders
according to their respective rights and interests.
Miscellaneous
There are no preemptive rights, sinking fund provisions, conversion
rights, or redemption provisions applicable to Zions Common Stock or Aspen
Common Stock. Holders of fully paid shares of Zions Common Stock and Aspen
Common Stock are not subject to any liability for further calls or assessments.
LEGAL OPINIONS
Opinions with respect to certain legal matters in connection with the
Reorganization will be rendered by Duane, Morris & Heckscher, Washington, D.C.,
as counsel for Zions, and by Rothgerber, Appel, Powers & Johnson LLP, Denver,
Colorado, as counsel for Aspen.
EXPERTS
The consolidated financial statements of Zions as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December 31,
1996, incorporated by reference herein have been incorporated by reference
herein in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of such firm as experts in auditing and accounting.
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<PAGE>
The consolidated financial statements of Aspen as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December 31,
1996, incorporated by reference herein have been incorporated by reference
herein in reliance upon the report of Dalby, Wendland & Co., P.C., independent
certified public accountants, incorporated by reference herein, and upon their
authority as experts in auditing and accounting.
OTHER MATTERS
The management of Aspen does not know of any other matters intended to
be presented for shareholder action at the Special Meeting. If any other matter
does properly come before the Special Meeting and is put to a shareholder vote,
the proxies solicited hereby will be voted in accordance with the judgment of
the proxyholders named thereon.
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<PAGE>
The Board of Directors
March 13, 1997
Page 1
APPENDIX A
THE WALLACH COMPANY
INVESTMENT BANKERS
1401 Seventeenth Street, Suite 750
Denver, Colorado 80202
March 24, 1997
The Board of Directors
Aspen Bancshares, Inc.
534 East Hyman Avenue
Aspen, CO 81612
Members of the Board:
You have requested our opinion as to the fairness, from a financial
point of view, to the common stockholders of Aspen Bancshares, Inc. ("Aspen") of
the consideration in the proposed merger (the "Merger") of Aspen with and into
Zions Bancorporation ("Zions") pursuant to the Agreement and Plan of
Reorganization dated November 19, 1996, and as amended March 11, 1997 (the
"Agreement"). Under the terms of the Agreement, each outstanding share of Aspen
common stock, $0.01 par value, will be exchanged for shares of Zions common
stock, no par value (the "Consideration") as described in Section 1.2.b in the
Agreement.
In arriving at our opinion, we have, among other things:
i. reviewed certain publicly available financial
statements and other financial information not
publicly available for Aspen;
ii. reviewed and evaluated the current condition and
growth prospects for Aspen and its subsidiary banks,
including financial projections prepared by Aspen's
management;
iii. discussed with Aspen management the past and current
operations and financial conditions of Aspen and the
prospects of Aspen if it were to remain independent;
iv. reviewed Aspen's historical stock trading activity
and considered the prospect for value, liquidity,
dividend yield and appreciation if Aspen were to
remain independent;
v. evaluated the economic, business and competitive
climate for banking institutions in Colorado, with
special consideration given to recent transactions
that may have increased the competitive environment
in the financial services and banking industry;
vi. reviewed the process used leading to the Zions offer,
including a review of the potential acquirers
contacted and their responses relative to a potential
acquisition of Aspen;
<PAGE>
The Board of Directors
March 24, 1997
Page 2
vii. compared the various offers received from interested
parties and determined that the terms of the
Agreement represented the highest value in absolute
terms;
viii. compared the terms of the Agreement to recent
transactions involving other institutions of similar
size in Colorado;
ix. examined the price and trading activity for Zions
common stock;
x. reviewed the implications for Aspen's shareholders
receiving Zions stock with regards to prospects for
value, liquidity, dividend yield and appreciation;
xi. reviewed certain publicly available financial
statements of Zions, visited certain Zions facilities
in Salt Lake City, and discussed the prospects of
Zions with Zions' management; and
xii. reviewed the Agreement.
Neither Zions nor Aspen imposed any limitations upon the scope of the
investigation performed by us in formulating our opinion. In rendering our
opinion, we did not independently verify the asset quality and financial
condition of Zions or Aspen, but instead relied upon the data provided by or on
behalf of Zions and Aspen to be true and accurate in all material respects.
We have assumed without independent verification the accuracy and
completeness of the financial and other information regarding Aspen that was
provided for us or obtained from publicly available sources. We have not
prepared or acquired an independent valuation or appraisal of any of the assets
of Aspen and we have assumed without independent verification that the aggregate
allowance for loan losses of Aspen is adequate to cover such losses. With
respect to business plans and forecasts, we have assumed that they have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of Aspen as to the future performance of Aspen,
its subsidiaries and business units. Furthermore, we have assumed that the
Merger will be consummated on a timely basis in accordance with its terms and
pursuant to the Agreement. We have also taken into account our assessment of
general economic, market and financial conditions as they exist, as well as our
experience in connection with similar transactions and securities valuations
generally. Our opinion necessarily is based upon conditions as they exit and can
be evaluated as of the date of this opinion.
The Wallach Company is an investment banking firm engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, private placements, and valuations for corporate and other
purposes. The Wallach Company, as the Company's financial adviser, assisted with
the marketing and negotiations leading to the Agreement for which it has and
will receive compensation.
<PAGE>
The Board of Directors
March 24, 1997
Page 3
For our services in connection with preparing a plan for obtaining
acquisition offers for Aspen, soliciting and negotiating such acquisition
offers, rendering our opinion as to the fairness of the Merger to Aspen's
shareholders from a financial point of view and certain other services in
connection therewith, Aspen has agreed to pay us certain fees. We will receive a
cash fee upon the effectiveness of the Merger equal to 1.25% of the first $55
million and 3.00% of the amount in excess of $55 million received by Aspen's
shareholders in the transaction based on the value of Zions' common stock issued
to Aspen's shareholders in the Merger. From December 1995 to the effective date
of the Merger, we have or will receive a monthly retainer of $7,500 which will
be credited against the transaction fee due at the effectiveness of the Merger.
We have also received reimbursement of our actual out-of-pocket expenses. Prior
to being retained for this assignment, we have provided professional services to
Aspen. Historically, the revenues derived from such services have been
insignificant when compared to our firm's total gross revenues.
Based on our analysis of the foregoing, the assumptions described above
and upon such other factors we deem relevant, it is our opinion that, as of the
date hereof, the Consideration is fair to Aspen's shareholders from a financial
point of view.
/s/ The Wallach Company
<PAGE>
APPENDIX B
March 24, 1997
Zions Bancorporation
Attn: Harris H. Simons
President and Chief Executive Officer
One South Main Street, Suite 1380
Salt Lake City, UT 84133
Aspen Bancshares, Inc.
Attn: Charles B. Israel
534 East Hyman Avenue
P.O. Box 3677
Aspen, CO 81612
Re: Merger of Aspen Bancshares, Inc. With and Into Zions Bancorporation
Ladies and Gentlemen:
We have represented Aspen Bancshares, Inc., a Colorado corporation
which is a registered bank holding company ("Aspen"), in connection with the
proposed merger of Aspen with and into Zions Bancorporation, a Utah corporation
which is a registered bank holding company ("Zions"), under the laws of Colorado
and Utah and federal law (the "Merger"). The Merger shall be effected pursuant
to the provisions of the Agreement and Plan of Reorganization dated November 19,
1996, entered into by and between Zions and Aspen (the "Merger Agreement"). We
deliver this opinion pursuant to Section 3.5 of the Merger Agreement. The Merger
Agreement defines those capitalized terms appearing in this letter which are not
defined in this letter. Unless otherwise indicated, all sections refer to the
Internal Revenue Code of 1986, as amended (the "Code").
Pursuant to the Merger Agreement, the Merger shall be effectuated
through the merger of Aspen with and into Zions, with Zions surviving in
accordance with federal and Utah law. Upon consummation of the Merger Agreement,
each outstanding share of Aspen common stock (the "Aspen Common Stock"), other
than shares held by Aspen as treasury stock or held by any other direct or
indirect subsidiary of Aspen (except as trustee or in a fiduciary capacity),
shall be converted into the right to receive and be exchangeable for shares of
Zions Common Stock under the terms and conditions set forth in the Merger
Agreement.
No fractional shares of Zions Common Stock will be issued in exchange
for Aspen Common Stock. Instead, each Aspen shareholder who surrenders an Aspen
Common Stock certificate representing a fraction of a share of Zions Common
Stock will be entitled to receive, in addition to a certificate for the whole
shares
<PAGE>
Zions Bancorporation
Aspen Bancshares, Inc.
March 24, 1997
Page 2
of Zions Common Stock represented by the surrendered certificates, cash in an
amount equal to such fractional part of a share of Zions Common Stock.
In addition to the foregoing facts, on the date of this letter, you
have delivered to us certificates in which you have made certain
representations, which we consider relevant to this opinion, in regard to the
Merger and have authorized us to rely on such representations in expressing the
opinions contained in this letter.
As counsel to Aspen, we have examined the Merger Agreement and copies
of ancillary agreements, certificates, instruments and documents pertaining to
the Merger delivered by the parties to the Merger. In such examination, we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us. As to any facts material to our opinions expressed in this
letter, we have relied on representations of the parties to the Merger and have
not undertaken to verify any of those representations by independent
investigation. We have based our opinions contained in this letter on our
analysis of the Code, Treasury Regulations promulgated thereunder, and relevant
interpretive authorities as in effect on the date of this letter.
Based on the foregoing, we are of the opinion that:
1. The Merger qualifies as a "reorganization" within the meaning of
Section 368(a)(1)(A). Aspen and Zions each are a "party to a reorganization"
within the meaning of Section 368(b)(2).
2. No gain or loss will be recognized for federal income tax purposes
by Aspen and Zions in connection with the Merger. Sections 361(a) and 1032(a).
3. No gain or loss will be recognized for federal income tax purposes
by holders of shares of Aspen Common Stock upon the conversion in the Merger of
such shares solely into shares of Zions Common Stock. Section 354(a).
Shareholders of Aspen Common Stock will recognize gain or loss to the extent
such shareholders receive cash as a result of the Merger including any cash
representing an interest in fractional shares of Zions. The payment of cash to
the Aspen shareholders will be treated as though the fractional shares were
distributed as part of the transaction and then redeemed by Zions. The cash
payment will be treated as a distribution in full payment for the fractional
shares deemed redeemed under section 302(a), with the result that such Aspen
shareholders will have short-term or long-term capital gain or loss to the
extent that the amount of the cash distribution differs from the basis allocable
to such fractional shares. See Rev. Rul. 66-365, 1966-2 C.B. 116.
4. The basis of shares of Zions Common Stock received in the Merger by
holders of Aspen Common Stock will be the same as the basis of such shares of
Aspen Common Stock surrendered in exchange therefor. Section 358.
5. The holding period of shares of Zions Common Stock received in the
Merger by holders of Aspen Common Stock will include the period during which
such shares of Aspen Common Stock surrendered in exchange therefor were held by
the
<PAGE>
Zions Bancorporation
Aspen Bancshares, Inc.
March 24, 1997
Page 3
holder thereof, provided such shares of Aspen Common Stock were held as capital
assets. Section 1223(1).
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to Rothgerber, Appel, Powers &
Johnson LLP under the caption "Legal Opinions" in the Proxy Statement/Prospectus
forming a part of the Registration Statement.
Very truly yours,
ROTHGERBER, APPEL, POWERS & JOHNSON LLP
/s/ Rothgerber, Appel, Powers & Johnson LLP
Shareholders of Aspen Bancshares, Inc.
April 18, 1997
Page 1
EXHIBIT 99.1
[ASPEN LETTERHEAD]
April 18, 1997
Shareholders of Aspen Bancshares, Inc.
Dear Shareholder:
A Special Meeting of the Shareholders of Aspen Bancshares, Inc.
("Aspen") has been called for 9:00 a.m., Colorado Time, on May 16, 1997, at
Pitkin County Bank and Trust Co., 534 East Hyman Avenue, Aspen, Colorado.
The purpose of the Special Meeting is to consider and act upon an
Agreement and Plan of Reorganization (the "Plan of Reorganization") between
Aspen and Zions Bancorporation ("Zions"). If the Plan of Reorganization is
approved, and all conditions are met, the Plan of Reorganization will result in
the merger of Aspen into Zions, with Zions being the surviving corporation.
Upon consummation of the Plan of Reorganization, each holder of Aspen's
Common Stock will, upon surrender of the shareholder's stock certificate, be
entitled to receive in exchange for each share held as of the effective date of
the Plan of Reorganization, that number of shares of Zions Common Stock
calculated by dividing the Purchase Price (as defined in the Plan of
Reorganization) of $73,000,000 plus certain accretions by the Average Closing
Price of Zions Common Stock (as defined in and made subject to certain upper and
lower thresholds by the Plan of Reorganization) and by further dividing the
number so reached by the sum of the number of shares of Aspen Common Stock
issued and outstanding as of the effective date of the merger and the option
equivalent number (as defined). No fractional shares of Zions Common Stock will
be issued. Instead, cash in an amount equal to the fractional part of a share
multiplied by the average closing price of Zions Common Stock (as determined
under the Plan of Reorganization) will be paid to Aspen shareholders.
On April 10, 1997, the closing price of Zions Common Stock was $115 3/8
per share and Aspen had issued and outstanding 3,720,780 shares of its Common
Stock. The Daily Sales Price (as defined in the Plan of Reorganization) has been
in excess of the $93.00 ceiling to the Average Closing Price established in the
Plan of Reorganization since November 20, 1996. The Plan of Reorganization
provides a mechanism under such circumstances whereby the parties might act
sequentially to cause the Average Closing Price to be in excess of $93.00,
despite the $93.00 ceiling, which would reduce the number of shares of Zions
Common Stock to be issued to holders of Aspen Common Stock. In accordance with
the Plan of Reorganization, the Average Closing Price can be higher than $93.00,
and as a result the fraction of a share of Zions Common Stock to be received for
each
<PAGE>
Shareholders of Aspen Bancshares, Inc.
April 18, 1997
Page 2
share of Aspen Common Stock will be smaller, in the event that Zions is entitled
to and determines to provide notice to Aspen of the intention of Zions to
terminate the Plan of Reorganization by reason of the price appreciation of
Zions Common Stock having met certain criteria set forth in the Plan of
Reorganization and thereafter Aspen exercises the Company Election (or, in the
reverse situation, lower than the $83.00 floor if Aspen is entitled to and
determines to provide notice to Zions of the intention of Aspen to terminate the
Plan of Reorganization by reason of the price decline of Zions Common Stock
having met certain criteria set forth in the Plan of Reorganization and
thereafter Zions exercises the Zions Election). See "Summary -- Certain
Definitions -- Company Election" and "-- Zions Election" and "Plan of
Reorganization -- Authorized Termination and Damages for Breach."
On April 10, 1997, the appreciation in the price of Zions Common Stock
since November 19, 1996 has exceeded that of the KBW 50 Index (as defined in the
Plan of Reorganization) by more than 15 percentage points. If during the Pricing
Period (as defined in the Plan of Reorganization) the average of the Daily Sales
Prices of Zions Common Stock is higher than $93.00 and the appreciation in the
price of Zions Common Stock since November 19, 1996 exceeds that of the KBW 50
Index by more than 15 percentage points, these factors would enable Zions to
provide notice to Aspen of the intention of Zions to terminate the Plan of
Reorganization and, hence, enable Aspen to exercise the Company Election.
Assuming that Zions was entitled to and determined to provide notice to Aspen of
the intention of Zions to terminate the Plan of Reorganization by reason of
these price appreciation factors having met the criteria set forth in the Plan
of Reorganization, and thereafter Aspen exercised the Company Election, if the
Reorganization had been consummated as of April 10, 1997, the Average Closing
Price after exercise of the Company Election would have been $100.64. The
parties have assumed for the purpose of the calculation that follows that the
Average Closing Price was equal to the closing price of Zions on the NASDAQ-NMS
on April 10, 1997. Assuming that the Purchase Price equalled $73,968,000 on
April 10, 1997, shareholders of Aspen under such circumstances would have
received .190232 shares of Zions Common Stock for each share of Aspen Common
Stock or an equivalent consideration to holders of Aspen Common Stock of $21.95
per share.
Since there can be no assurance that Zions will provide notice to Aspen
of Zions' intention to terminate the Plan of Reorganization, even if it is
entitled to do so, and that Aspen upon receipt of any such notice will exercise
the Company Election, in each case if permitted by the Plan of Reorganization,
it is possible under such circumstances that the Average Closing Price could be
$93.00. Assuming under such circumstances that the Purchase Price equalled
$73,968,000 on April 10, 1997, the Reorganization had been consummated as of
that date, and the Average Closing Price of Zions Common Stock had been $93.00,
shareholders of Aspen would have received .205859 shares of Zions Common Stock
for each share of Aspen Common Stock or an equivalent consideration to holders
of Aspen Common Stock of $23.75 per share.
Because the market price of the shares of Zions Common Stock is subject
to fluctuation, the per share stock distribution may change before the
Reorganization. See "Plan of Reorganization." Aspen shareholders are encouraged
to obtain current market quotations for Zions Common Stock and Aspen Common
Stock and to consider the interplay between the quotations and the definitions
of
<PAGE>
Shareholders of Aspen Bancshares, Inc.
April 18, 1997
Page 3
"Average Closing Price," "Company Election," and "Zions Election." See "Certain
Definitions" above. No assurance can be given as to the market price of Zions
Common Stock or Aspen Common Stock at, or in the case of Zions Common Stock
after, the Effective Date.
The accompanying Proxy Statement/Prospectus details the terms of the
proposed Plan of Reorganization and provides information concerning Aspen,
Zions, and the Plan of Reorganization. The Proxy Statement/Prospectus contains
important information necessary for you to make a decision about how to vote at
the Special Meeting. Please read it carefully.
The affirmative vote of a majority of the issued and outstanding shares
of Aspen is required for approval of the Plan of Reorganization. Therefore, it
is important that you vote. Failure to vote will have the same effect as a vote
against the Reorganization. Consequently, please mark, sign, date and return the
enclosed proxy as soon as possible.
Any shareholder may attend the Special Meeting and vote in person if he
or she desires.
Consummation of the Plan of Reorganization is subject to approval by
federal and state bank regulatory agencies which approvals have been received
and to certain other conditions, including the maintenance of Aspen's financial
condition. If approved, the Plan of Reorganization will most likely be
consummated sometime in second quarter of 1997.
The Board of Directors has unanimously approved the Plan of
Reorganization and determined that the Reorganization is in the best interests
of Aspen, its shareholders, employees and the community it serves. The Board of
Directors unanimously recommends that you vote to approve the Plan of
Reorganization.
If the Plan of Reorganization is approved by the shareholders, on or
shortly after the effective date of the Plan of Reorganization, Zions will send
you instructions describing the procedure to be followed to exchange your Aspen
stock certificate for Zions Common Stock. Please do not send your certificates
to Aspen prior to receiving these instructions.
Sincerely,
/s/ Charles B. Israel
-------------------------------------
Charles B. Israel
President and Chief Executive Officer
EXHIBIT 99.2
ASPEN BANCSHARES, INC.
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
A Special Meeting of shareholders of Aspen Bancshares, Inc.
("Aspen") will be held at 9:00 a.m., local time, on May 16, 1997, at Pitkin
County Bank and Trust Co., 534 East Hyman Avenue, Aspen, Colorado, to consider
and act upon an Agreement and Plan of Reorganization dated as of November 19,
1996 as amended on March 11, 1997 (the "Plan of Reorganization"), between
Zions Bancorporation ("Zions") and Aspen. The Plan of Reorganization provides
for the merger of Aspen into Zions with Zions being the surviving corporation.
Upon the consummation of the Plan of Reorganization, each
holder of shares of Aspen Common Stock will be entitled to receive, in exchange
for each share held as of the effective date of the Plan of Reorganization, that
number of shares of Zions Common Stock calculated by dividing the Purchase Price
(as defined in the Plan of Reorganization) of $73,000,000 plus certain
accretions by the Average Closing Price of Zions Common Stock (as defined in and
made subject to certain upper and lower thresholds by the Plan of
Reorganization) and by further dividing the number so reached by the sum of the
number of shares of Aspen Common Stock that are issued and outstanding as of the
effective date of the merger and the option equivalent number (as defined).
The Board of Directors has set April 16, 1997, as the
record date for determining shareholders entitled to notice of and to vote at
the Special Meeting.
Aspen shareholders are not entitled to assert dissenters'
rights under Colorado law.
By order of the Board of Directors
Dated: April 18, 1997.
/s/ Charles B. Israel
-----------------------------------------
Charles B. Israel,
President and Chief Executive Officer
Please mark, sign and return the enclosed proxy in the envelope
provided.
EXHIBIT 99.3
PROXY
SPECIAL MEETING OF SHAREHOLDERS
OF ASPEN BANCSHARES, INC.
May 16, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Morton A. Heller and Charles
B. Israel, and each of them, as proxies of the undersigned to vote as designated
below on behalf of the undersigned as a holder of the common capital stock of
Aspen Bancshares, Inc. (the "Aspen Common Stock") that the undersigned held of
record on April 16, 1997, which the undersigned is entitled to vote, at the
special meeting of shareholders to be held May 16, 1997, or at any postponement
or adjournment thereof, for the purpose of considering and acting on the
proposal to approve the Agreement and Plan of Reorganization dated November 19,
1996 as amended on March 11, 1997 (the "Plan of Reorganization"), between Zions
Bancorporation ("Zions") and Aspen Bancshares, Inc. ("Aspen") which provides for
the merger of Aspen into Zions, and the conversion of each outstanding share of
Aspen Common Stock into the right to receive that number of shares of Zions
Common Stock calculated by dividing the Purchase Price (as defined in the Plan
of Reorganization) of $73,000,000 plus certain accretions by the Average Closing
Price of Zions Common Stock (as defined in and made subject to certain upper and
lower thresholds by the Plan of Reorganization) and by further dividing the
number so reached by the sum of the total number of shares of Aspen Common Stock
issued and outstanding as of the Effective Date of the Plan of Reorganization
and the option equivalent number (as defined). Each Proxy shall have full power
of substitution. Approval of the Plan of Reorganization requires the affirmative
vote of a majority of the outstanding shares of Aspen Common Stock. The act by a
majority of the Proxies or their substitutes present at the meeting shall
control; however, if only one proxy be present, that one shall have all powers
hereunder.
The Directors recommend a vote FOR Proposal 1.
1. Approval of the Plan of Reorganization.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The Proxies, in their discretion, are authorized to vote on such other
business as may properly come before the meeting.
When properly completed, this proxy will be voted in the manner directed
herein by the undersigned. If no direction is given, this proxy will be voted
FOR the approval of the Plan of Reorganization.
<PAGE>
(Each person whose name is on the Aspen Common Stock
certificate should sign below in the same manner in
which such person's name appears. If signing as a
fiduciary, give title.)
Signature
Printed Name
Dated:
----------------------------
Please date, sign,
and return promptly
