ZIONS BANCORPORATION /UT/, 424B1, 1998-06-08

ZIONS BANCORPORATION /UT/
424B1, 1998-06-08
NATIONAL COMMERCIAL BANKS

Previous: YORK RESEARCH CORP, 10-K/A, 1998-06-08

Next: SEAL HOLDINGS CORP, DEFR14A, 1998-06-08

<PAGE>

FILED PURSUANT TO RULE 424(b)(1)
REGISTRATION NO. 333-51815

2,400,000 SHARES

ZIONS BANCORPORATION

COMMON STOCK
(NO PAR VALUE PER SHARE)

The Common Stock is quoted on the Nasdaq National Market under the symbol
"ZION". The last reported sale price of the Common Stock on June 4, 1998 was
$49.625 per share. See "Dividends and Price Range of Common Stock".

----------------

THESE SECURITIES 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 PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

----------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ ------------
<S> <C> <C> <C>
Per Share.............................. $49.125 $1.965 $47.16
Total(3)............................... $117,900,000 $4,716,000 $113,184,000
</TABLE>
- --------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(2) Before deducting estimated expenses of $290,845 payable by the Company.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 360,000 shares at the initial public offering price
per share, less the underwriting discount, solely to cover over-
allotments. If such option is exercised in full, the total initial public
offering price, underwriting discount and proceeds to Company will be
$135,585,000, $5,423,400 and $130,161,600, respectively. See
"Underwriting".

----------------

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
shares will be ready for delivery in New York, New York on or about June 10,
1998 against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.

----------------

The date of this Prospectus is June 4, 1998.
<PAGE>

A Collection of Great Banks

[Framed pictures showing (1) a sailboat on the ocean, (2) leaves, (3) a cowboy
on a horse, (4) cacti, (5) a rock formation in the desert, (6) a skier, (7) a
farmer and (8) a golfer.]

NORTH CAROLINA

The Commissioner of Insurance of the state of North Carolina has not
approved or disapproved this offering nor has the Commissioner passed upon the
accuracy or adequacy of this Prospectus.

----------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
<PAGE>

PROSPECTUS SUMMARY

The following summary is not intended to be complete and is qualified in all
respects by the more detailed information included in this Prospectus and the
documents incorporated herein by reference. Unless the context otherwise
requires, references to "Zions" or the "Company" herein shall be to Zions and
its direct and indirect subsidiaries and references to "Common Stock" herein
shall be to the Company's common stock, no par value per share. Except as
otherwise specified, all information in this Prospectus assumes no exercise of
the Underwriters' over-allotment option. All financial information presented
herein as of or for the three months ended March 31, 1997 has been restated to
reflect the acquisition of Vectra Banking Corporation ("Vectra") by the Company
on January 6, 1998.

THE COMPANY

Zions, headquartered in Salt Lake City, Utah, is the sixth largest bank
holding company based in the western United States. Zions has grown rapidly
over the last five years through continued penetration of existing markets and
through the acquisition of profitable community banks in high economic growth
markets. As of March 31, 1998, Zions had total assets of $10.6 billion, total
deposits of $7.8 billion and total shareholders' equity of $724 million.
Through its banking subsidiaries, Zions operated 253 branches in the states of
Arizona, California, Colorado, Idaho, Nevada, New Mexico and Utah as of March
31, 1998.

The Company's community banks differentiate themselves from the competition
by providing a high level of service and responsiveness to customers, while
offering the broader product array and more efficient cost structure usually
associated with a much larger bank. The Company's banks operate with strong
local management, substantial local decision-making authority and, in general,
a localized brand identity. While executing its strategy to aggressively grow
its operations in its current markets and to opportunistically expand into high
economic growth regions, the Company has begun to centralize back-office and
staff functions for all of its subsidiary banks to improve operating efficiency
and reduce administrative burden. The Company supplements its core community
banking business by providing specialized financial services.

The Company grew substantially in 1997, expanding the geographic scope of its
operations, while at the same time achieving record financial performance. In
1997, net income increased to $122.4 million, or $1.89 per diluted share,
representing increases of 13.9% and 12.5%, respectively, over 1996. Operating
cash earnings per diluted share (i.e., earnings per share before amortization
of goodwill and core deposit intangible assets and merger expenses) was $2.01
for 1997, an increase of 16.9% over 1996. In addition, the Company's return on
average common equity and operating cash return on average common equity were
19.88% and 25.34%, respectively, for 1997, compared to 20.95% and 23.26%,
respectively, for 1996.

In 1997, Zions made acquisitions that expanded its banking operations into
new markets, broadening its primary market area to the seven western states of
Arizona, California, Colorado, Idaho, Nevada, New Mexico and Utah. In total,
Zions announced 13 acquisitions during 1997 and the first quarter of 1998,
including that of The Sumitomo Bank of California ("Sumitomo"), Zions' largest
acquisition to date (the "Sumitomo Acquisition").

RECENT DEVELOPMENTS; SUMITOMO ACQUISITION

1
<PAGE>

and San Francisco markets. The Company intends to combine Sumitomo with its
California subsidiaries, Grossmont Bank and First Pacific National Bank ("First
Pacific"), upon consummation of the Sumitomo Acquisition. Such combination will
result in the fifth largest commercial bank in California (the "California
Subsidiary"), with 71 branches and assets of over $6 billion. For more
information on the Sumitomo Acquisition, see "Business--Recent Developments;
Sumitomo Acquisition". Subject to regulatory and shareholder approval, the
Sumitomo Acquisition is expected to close in the third quarter of 1998.

In addition, the Company has recently acquired SBT Bankshares, Inc. ("SBT"),
the parent company of State Bank and Trust of Colorado Springs (the "SBT
Merger"), and Routt County National Bank Corporation ("Routt"), the parent
company of First National Bank of Colorado in Steamboat Springs (the "Routt
Merger"). The Company has also entered into other definitive merger agreements
in Colorado with each of Kersey Bancorp, Inc. ("Kersey") and Mountain Financial
Holding Company ("Mountain") (such mergers being referred to herein as the
"Kersey Merger" and the "Mountain Merger", respectively), pursuant to which
such companies will be merged with and into the Company. In total, these four
mergers will add approximately $429 million in assets to the Company. Subject
to regulatory and shareholder approval, the Kersey Merger and the Mountain
Merger are expected to close in the third quarter of 1998. Finally, the Company
has entered into a definitive agreement with The Commerce Bancorporation
("Commerce") pursuant to which Commerce will be merged (the "Commerce Merger"
and, together with the FP Merger, the SBT Merger, the Routt Merger, the Kersey
Merger and the Mountain Merger, the "Other Mergers") with and into the Company.
The Commerce Merger, which, subject to regulatory and shareholder approval, is
expected to close in the third quarter of 1998, will represent Zions' first
entry into the state of Washington and the Seattle market. At March 31, 1998,
Commerce had assets of $330 million and operated one branch in Seattle.

BUSINESS STRATEGY

The Company's community banks differentiate themselves from the competition
by providing a high level of service and responsiveness to customers, while at
the same time offering the broader product array and more efficient cost
structure usually associated with a much larger bank. The Company has used this
strategy to aggressively grow in its current markets and to opportunistically
expand into high economic growth markets. The Company's banks operate with
strong local management, substantial local decision-making authority and, in
general, a localized brand identity. While executing its strategy to
aggressively grow its operations in its current markets and to
opportunistically expand into high economic growth regions, the Company has
begun to centralize back-office and staff functions for all of its subsidiary
banks to improve operating efficiency and reduce administrative burden. In
addition, the Company has centralized risk management and the approval of
credit policy to achieve further efficiencies and to appropriately manage risk.

The Company believes that its business strategy provides a meaningful
competitive advantage, which it believes has been a significant factor in its
ability to maintain loan and deposit growth rates in excess of the economic
growth rates of the markets in which it conducts business.

The Company has opportunistically expanded into contiguous high-growth areas
in the western United States through mergers and acquisitions, which have been
immediately accretive to earnings. The Company has found that many community
banks consider its strategy and management style attractive and, consequently,
consider Zions to be a business partner of choice.

The Company enhances its core community banking strategy and improves
shareholder returns by providing specialized financial services, including
nationwide small business lending, financial advisory, underwriting and other
services for municipalities, digital certificate authority and repository

2
<PAGE>

functions for electronic commerce, servicing for the Federal Agricultural
Mortgage Corporation ("Farmer Mac") and other services.

For a more extensive discussion of the Company's business strategy, see
"Business--Business Strategy".

Zions' principal executive offices are located at One South Main, Suite 1380,
Salt Lake City, Utah 84111 (telephone: 801-524-4787).

3
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company(1)....... 2,400,000 shares
Common Stock to be outstanding after the
offering(1)(2).............................. 71,475,665 shares
Nasdaq National Market symbol................ ZION
Use of Proceeds.............................. The Company intends to use the
net proceeds from the offering
to fund a portion of the
purchase price of the Sumitomo
Acquisition. In addition, the
shares of Common Stock will
qualify as Tier I Capital of
the Company for regulatory
purposes. See "Use of
Proceeds".
</TABLE>
- --------
(1) Assumes no exercise of the Underwriters' over-allotment option to purchase
up to an additional 360,000 shares of Common Stock from the Company. See
"Underwriting".

(2) Does not include (i) as of March 31, 1998 (A) 1,738,558 shares of Common
Stock issuable upon exercise of outstanding options or (B) 474,852 shares
of Common Stock reserved for issuance pursuant to future option grants
under the Company's stock option plans or (ii) up to approximately
6,083,531 shares of Common Stock issued or issuable in connection with the
Other Mergers.

4
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data presented below as of and for each of
the five years in the period ended December 31, 1997 and as of and for the
three months ended March 31, 1998 and 1997 are derived from and qualified by
reference to the consolidated financial statements of the Company. The
Company's consolidated financial statements as of and for each of the five
years in the period ended December 31, 1997 have been audited by KPMG Peat
Marwick LLP, the Company's independent certified auditors. As a result of the
Company's acquisition on January 6, 1998 of Vectra and its subsidiary, Vectra
Bank, the Company has restated its financial statements as of and for the three
months ended March 31, 1997 and as of and for the year ended December 31, 1997.
See the Company's unaudited Consolidated Financial Statements and Notes thereto
in the Company's Quarterly Report on Form 10-Q for the period ended March 31,
1998, incorporated by reference herein. For the purpose of comparability, the
financial information as of and for the year ended December 31, 1997 included
in this Prospectus does not reflect such restatement. The data should be read
in conjunction with, and are qualified by reference to, "Management's
Discussion and Analysis of Financial Condition and Results of Operations", the
"Unaudited Pro Forma Condensed Combined Financial Information" and the
Consolidated Financial Statements and Notes thereto contained elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------- ----------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF INCOME DATA:
Interest income......... $293.6 $354.0 $439.5 $519.0 $682.3 $ 160.1 $ 201.7
Interest expense........ 119.0 155.4 205.9 229.9 330.5 77.2 93.7
------ ------ ------ ------ ------ ------- -------
Net interest income.... 174.6 198.6 233.6 289.1 351.8 82.9 108.0
Provision for loan
losses................. 3.0 2.2 3.0 4.6 6.2 1.8 3.3
------ ------ ------ ------ ------ ------- -------
Net interest income
after provision for
loan losses........... 171.6 196.4 230.6 284.5 345.6 81.1 104.7
Noninterest income...... 79.9 73.2 88.8 114.3 143.2 34.1 43.8
Noninterest expense..... 167.8 174.9 195.2 235.3 301.2 68.2 95.5
------ ------ ------ ------ ------ ------- -------
Income before income
taxes................. 83.7 94.7 124.2 163.5 187.6 47.0 53.0
Income taxes............ 27.2 30.9 41.8 56.1 65.2 16.4 16.6
------ ------ ------ ------ ------ ------- -------
Interest before
cumulative effect of
changes in accounting
principles............ 56.5 63.8 82.4 107.4 122.4 30.6 36.4
Cumulative effect of
changes in accounting
principles............. 1.7 -- -- -- -- -- --
------ ------ ------ ------ ------ ------- -------
Net income.............. $ 58.2 $ 63.8 $ 82.4 $107.4 $122.4 $30.6 $36.4
====== ====== ====== ====== ====== ======= =======
Operating cash
earnings(1)............ $ 59.6 $ 65.5 $ 84.7 $110.2 $130.0 $31.5 $40.2
====== ====== ====== ====== ====== ======= =======
Net income per common
share (diluted)........ $ 1.02 $ 1.09 $ 1.37 $ 1.68 $ 1.89 $0.45 $0.52
Operating cash earnings
per common share
(diluted)(1)........... 1.04 1.12 1.41 1.72 2.01 0.46 0.57
Weighted-average common
and common-equivalent
shares outstanding
during the year (in
thousands)............. 57,120 58,404 60,013 63,787 64,629 68,025 70,159
CONSOLIDATED BALANCE
SHEET DATA (AT PERIOD
END):
Loans(2)................ $2,486 $2,391 $3,068 $3,837 $4,872 $4,450 $5,650
Total assets............ 4,801 4,934 6,096 7,116 9,522 8,509 10,612
Deposits................ 3,432 3,706 4,511 5,120 6,854 5,729 7,799
Total shareholders'
equity................. 313 366 470 555 655 592 724
OTHER DATA:
Return on average
assets................. 1.25% 1.17% 1.43% 1.55% 1.33% 1.41% 1.35%
Operating cash return on
average assets(1)...... 1.29 1.20 1.47 1.60 1.43 1.46 1.51
Return on average common
equity................. 20.33 18.82 20.22 20.95 19.88 20.75 20.84
Operating cash return on
average common
equity(1).............. 21.94 20.54 22.08 23.26 25.34 23.52 30.27
Efficiency ratio........ 64.89 63.25 59.56 57.29 60.02 57.40 61.71
Operating cash
efficiency ratio(1).... 64.19 62.53 58.77 56.60 58.32 56.61 58.96
Net interest margin..... 4.23 4.07 4.53 4.68 4.27 4.22 4.51
Nonperforming assets to
net loans and leases
and nonperforming
assets................. 1.23 0.79 0.41 0.36 0.33 0.40 0.36
Allowance for loan
losses to nonperforming
loans.................. 250.13 471.89 660.17 566.35 638.84 524.70 509.50
Tier I leverage......... 5.44 6.24 6.33 8.70 6.75 8.09 6.89
Tier I risk-based
capital................ 10.85 11.81 11.33 14.16 11.74 13.95 11.73
Total risk-based
capital................ 14.12 14.96 14.03 17.52 13.75 16.52 13.62
Total branches.......... 113 117 141 153 228 172 253
</TABLE>
- -------
(1) Operating cash earnings represent earnings before amortization of goodwill
and core deposit intangible assets and merger expense.

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

5
<PAGE>

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The summary unaudited pro forma condensed combined financial data presented
below for the year ended December 31, 1997 and as of and for the three months
ended March 31, 1998 are derived from and qualified by reference to the
Unaudited Pro Forma Condensed Combined Financial Information included elsewhere
in this Prospectus. Such information gives effect to the Sumitomo Acquisition
using the purchase method of accounting and the issuance and sale of the shares
of Common Stock offered hereby and is based upon the assumptions described in
Notes to Unaudited Pro Forma Condensed Combined Financial Information. Such
information does not give effect to the Other Mergers or the intended issuance
by the Company of $110 million of subordinated debt (the "Debt Issuance"), the
net proceeds of which the Company will contribute to the California Subsidiary
upon consummation of the combination of Grossmont Bank, Sumitomo and First
Pacific. The unaudited pro forma condensed combined balance sheet data are
based upon the consolidated balance sheet of the Company and the balance sheet
of Sumitomo as of March 31, 1998, and give effect to the Sumitomo Acquisition
and the issuance of the shares offered hereby as if they had occurred on such
date, and the unaudited pro forma condensed combined statement of income data
are based on the consolidated statements of income of the Company and the
statements of income of Sumitomo for the year ended December 31, 1997 and the
three months ended March 31, 1998, and give effect to the Sumitomo Acquisition
and the issuance and sale of shares as if they had occurred on January 1, 1997.
As a result of the Company's acquisition on January 6, 1998 of Vectra and its
subsidiary, Vectra Bank, the Company has restated its financial statements as
of and for the three months ended March 31, 1997 and as of and for the year
ended December 31, 1997. For the purpose of comparability with the other
financial information contained herein, the pro forma condensed combined
statement of income for the year ended December 31, 1997 has not been restated
to reflect such transaction. The pro forma data presented below are presented
for comparative purposes only and are not necessarily indicative of the
combined financial position or results of operations in the future. The pro
forma financial data are also not necessarily indicative of the combined
financial position or results of operations which would have been realized had
the Sumitomo Acquisition and the issuance and sale of shares offered hereby
been consummated during the period or as of the date for which the pro forma
financial data are presented. See "Business--Recent Developments; Sumitomo
Acquisition", "Unaudited Pro Forma Condensed Combined Financial Information"
and the Consolidated Financial Statements and Notes thereto of the Company
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
1997 MARCH 31, 1998
--------------------------- ----------------------------
HISTORICAL HISTORICAL
--------------- PRO FORMA ---------------- PRO FORMA
ZIONS SUMITOMO COMBINED(1) ZIONS SUMITOMO COMBINED(1)
------ -------- ----------- ------- -------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF INCOME DATA:
Interest income......... $682.3 $386.9 $1,046.0 $ 201.7 $ 93.9 $289.7
Interest expense........ 330.5 183.0 513.5 93.7 43.7 137.4
------ ------ -------- ------- ------ ------
Net interest income... 351.8 203.9 532.5 108.0 50.2 152.3
Provision for loan
losses................. 6.2 16.5 22.7 3.3 2.0 5.3
------ ------ -------- ------- ------ ------
Net interest income
after provision for
loan losses.......... 345.6 187.4 509.8 104.7 48.2 147.0
Noninterest income...... 143.2 24.2 167.4 43.8 5.8 49.6
Noninterest expense..... 301.2 150.0 461.8 95.5 42.6 140.3
------ ------ -------- ------- ------ ------
Income before income
taxes................ 187.6 61.6 215.4 53.0 11.4 56.3
Income taxes............ 65.2 20.4 74.5 16.6 4.0 17.8
------ ------ -------- ------- ------ ------
Net income.............. $122.4 $ 41.2 $ 140.9 $ 36.4 $ 7.4 $ 38.5
====== ====== ======== ======= ====== ======
Net income applicable to
common stock........... $122.3 $ 35.1 $ 134.7 $ 36.4 $ 5.9 $ 37.0
====== ====== ======== ======= ====== ======
Operating cash earnings
applicable to common
stock (2).............. $130.0 $ 35.1 $ 148.4 $ 40.2 $ 5.9 $ 42.4
====== ====== ======== ======= ====== ======
Net income per common
share (diluted)........ $ 1.89 $ 2.01 $ 0.52 $ 0.51
Operating cash earnings
per common share
(diluted).............. 2.01 2.21 0.57 0.58
Weighted-average common
and common-equivalent
shares outstanding
during the year
(in thousands)......... 64,629 67,029 70,159 72,559
CONSOLIDATED BALANCE
SHEET DATA (AT PERIOD
END):
Loans(3)................ $ 5,650 $3,866 $9,531
Total assets............ 10,612 4,886 15,212
Deposits................ 7,799 4,261 12,060
Total shareholders'
equity................. 724 506 837
</TABLE>
- -------
(1) The pro forma combined data reflect certain adjustments set forth in "Notes
to Pro Forma Condensed Combined Financial Statements".
(2) Operating cash earnings represent earnings before amortization of goodwill
and core deposit intangible assets and merger expense.
(3) Net of unearned income and fees, net of related costs.

6
<PAGE>

FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this Prospectus,
including without limitation statements containing the words "believes",
"anticipates", "intends", "expects" and words of similar import, constitute
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Zions to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic conditions in Zions' market areas; variances in interest
rates; changes in or amendments to regulatory authorities, capital requirements
or other regulations applicable to Zions or to Zions' banking subsidiaries;
increased competition for loans and deposits; and other factors referred to
elsewhere in this Prospectus and the documents incorporated by reference
herein. Zions disclaims any obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements included or incorporated by reference herein to reflect future
events or developments.

7
<PAGE>

USE OF PROCEEDS

The net proceeds from the sale of shares of Common Stock offered hereby are
expected to be $112.9 million (approximately $129.9 million if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use such net proceeds from the sale of shares of Common Stock offered
hereby to fund a portion of the purchase price of the Sumitomo Acquisition. In
addition, the shares of Common Stock will qualify as Tier I Capital of the
Company for regulatory purposes.

DIVIDENDS AND PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the Nasdaq National Market under the symbol
"ZION". The following table sets forth the high and low reported sale prices
for the Common Stock as quoted through the Nasdaq National Market for the
periods indicated and the cash dividends declared per share of Common Stock in
each quarter:

<TABLE>
<CAPTION>
PRICE RANGE
-------------
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
YEAR ENDING DECEMBER 31, 1996:
First Quarter...................................... $19.81 $16.69 $0.1025
Second Quarter..................................... 19.75 17.00 0.1025
Third Quarter...................................... 22.44 18.00 0.1100
Fourth Quarter..................................... 26.00 21.94 0.1100
YEAR ENDING DECEMBER 31, 1997:
First Quarter...................................... $33.25 $25.69 $0.1100
Second Quarter..................................... 37.63 28.38 0.1200
Third Quarter...................................... 41.13 34.69 0.1200
Fourth Quarter..................................... 46.00 37.63 0.1200
YEAR ENDING DECEMBER 31, 1998:
First Quarter...................................... $55.69 $39.56 $0.1200
Second Quarter (through June 4, 1998).............. 55.25 47.00 --
</TABLE>

The last reported sale price per share of Common Stock as quoted through the
Nasdaq Stock Market on June 4, 1998 was $49.625.

The Company intends to continue its present policy of paying quarterly cash
dividends to holders of Common Stock. Future dividends will be determined by
the Company's Board of Directors (the "Zions Board") based upon an assessment
of the earnings and financial condition of the Company and other factors,
including applicable governmental regulations and policies. The principal
sources of the Company's revenues are dividends and interest received from its
subsidiary banks. For a description of certain regulatory limitations on the
ability of its subsidiary banks to pay dividends, see "Business--Supervision
and Regulation--Regulatory Capital Requirements--Other Issues and Developments
Relating to Regulatory Capital". The Federal Reserve Board generally considers
it to be an unsafe and unsound banking practice for a bank holding company to
pay dividends except out of current operating earnings, although factors such
as overall capital adequacy and projected earnings may also be relevant in
determining whether dividends should be paid. See "Business--Supervision and
Regulation--Regulatory Capital Requirements--Other Issues and Developments
Relating to Regulatory Capital".

8
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of Zions (i) as of March
31, 1998, (ii) as adjusted for the Sumitomo Acquisition (but without giving
effect to the Other Mergers) and (iii) as further adjusted to reflect the
receipt by Zions of the estimated net proceeds from both the sale of the
2,400,000 shares of Common Stock offered hereby at an initial public offering
price of $49.125 per share and the proposed issuance of $110 million of
subordinated debt.

<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------------------
AS ADJUSTED FOR
THE SUMITOMO
ACQUISITION,
THE OFFERING OF
AS ADJUSTED FOR COMMON STOCK
THE SUMITOMO AND THE DEBT
ACTUAL ACQUISITION ISSUANCE
------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal Home Loan Bank Advances and
other borrowings over one year...... $ 121 $ 121 $ 121
Long-term debt....................... 276 279 389
Shareholders' equity(1):
Capital stock:
Preferred stock, without par
value; authorized 3,000,000
shares; issued and outstanding,
none............................ -- -- --
Common stock, without par value;
authorized 100,000,000 shares;
issued and outstanding,
69,075,665 shares; as adjusted,
69,075,665 shares; and as
further adjusted, 71,475,665(2). 150 150 263
Accumulated other comprehensive
income.............................. (1) (1) (1)
Retained earnings.................... 575 575 575
------- ------- -------
Total shareholders' equity......... 724 724 837
------- ------- -------
Total capitalization............... $ 1,121 $ 1,124 $ 1,347
======= ======= =======
</TABLE>
- --------
(1) Does not include (i) as of March 31, 1998 (A) 1,738,558 shares of Common
Stock issuable upon exercise of outstanding options or (B) 474,852 shares
of Common Stock reserved for issuance pursuant to future option grants
under the Company's stock option plans or (ii) up to approximately
6,083,531 shares of Common Stock issued or issuable in connection with the
Other Mergers.
(2) On April 27, 1998, the authorized number of shares of Common Stock was
increased to 200,000,000.

9
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial information set forth
below gives effect to the Sumitomo Acquisition using the purchase method of
accounting (but does not give effect to the Other Mergers) and the issuance
and sale of the shares of Common Stock offered hereby (but does not give
effect to the Debt Issuance) and is based upon the assumptions described in
Notes to Unaudited Pro Forma Condensed Combined Financial Information. The
unaudited pro forma condensed combined balance sheet is based upon the
consolidated balance sheet of the Company and the balance sheet of Sumitomo as
of March 31, 1998, and gives effect to the Sumitomo Acquisition and the
issuance of the shares offered hereby as if they had occurred on such date,
and the unaudited pro forma condensed combined statements of income are based
on the consolidated statements of income of the Company and the statements of
income of Sumitomo for the year ended December 31, 1997 and the three months
ended March 31, 1998, and give effect to the Sumitomo Acquisition and the
issuance and sale of shares as if they had occurred on January 1, 1997. As a
result of the Company's acquisition on January 6, 1998 of Vectra and its
subsidiary, Vectra Bank, the Company has restated its financial statements as
of and for the three months ended March 31, 1997 and as of and for the year
ended December 31, 1997. For the purpose of comparability with the other
financial information contained herein, the pro forma condensed combined
statement of income for the year ended December 31, 1997 has not been restated
to reflect such transaction. The pro forma condensed combined financial
statements presented below are presented for comparative purposes only and are
not necessarily indicative of the combined financial position or results of
operations in the future. The pro forma condensed combined financial
statements are also not necessarily indicative of the combined financial
position or results of operations which would have been realized had the
Sumitomo Acquisition and the issuance and sale of shares offered hereby been
consummated during the period or as of the date for which the pro forma
financial information is presented. See "Business--Recent Developments;
Sumitomo Acquisition" and the Consolidated Financial Statements and Notes
thereto of the Company included elsewhere in this Prospectus.

The pro forma condensed combined financial statements do not give effect to
expected reductions in deposits and planned dispositions of certain assets and
reductions in borrowings in connection with the Sumitomo Acquisition, or to
the redemption on April 30, 1998 of all of Sumitomo's outstanding preferred
stock with an aggregate liquidation preference of $75 million. Total deposits
are expected to decrease approximately $1 billion, with the decrease being
mainly in interest-bearing deposits. Total combined assets are expected to be
reduced by approximately $2 billion, from the sale of approximately $1 billion
in loans and a reduction of approximately $1 billion in investment securities
from maturity and repayment of the portfolio. Zions also plans to reduce its
short-term borrowings by approximately $1 billion. Plans also include
Sumitomo's reduction of long-term debt by approximately $63 million. After the
consummation of the Sumitomo Acquisition, the issuance of Common Stock offered
hereby and the aforementioned reductions in assets, it is anticipated that
Zions will maintain regulatory capital levels of not less than the "well-
capitalized" threshold, as defined by banking regulators. The pro forma
condensed combined financial statements also do not give effect to merger
costs related to the transaction or anticipated cost savings resulting from
the consolidation of operational functions.

For purposes of the pro forma condensed combined financial statements, it
has been assumed that the net book value of Sumitomo's assets minus
liabilities approximates fair value. When the Sumitomo Acquisition is
consummated, Sumitomo's asset and liabilities will be recorded at their fair
values which will change the allocation of the purchase price and the related
amortization from that reflected in the pro forma condensed combined financial
statements.

The pro forma condensed combined financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes thereto of
the Company contained elsewhere in this Prospectus, and the historical
financial statements of Sumitomo, including the respective notes thereto,
incorporated by reference herein.

10
<PAGE>

ZIONS AND SUMITOMO
PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1998 (A)
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL
----------------- PRO FORMA PRO FORMA
ZIONS SUMITOMO ADJUSTMENTS COMBINED
------- -------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
------
Cash and due from banks............... $ 586 $ 181 $ -- $ 767
Money market investments.............. 1,154 355 (416)(B) 1,093
Investment securities:
Held to maturity, at cost........... 1,880 110 -- 1,990
Available for sale, at market....... 466 347 -- 813
Trading............................. 276 -- -- 276
Loans, net of unearned................ 5,650 3,866 15 (B) 9,531
Allowance for loan losses............. 92 117 -- 209
------- ------ ----- -------
Net loans......................... 5,558 3,749 15 9,322
Intangible assets..................... 170 -- 135 (C) 305
Other assets.......................... 522 144 (20)(C) 646
------- ------ ----- -------
Total assets...................... $10,612 $4,886 $(286) $15,212
======= ====== ===== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Non-interest bearing deposits......... $ 2,041 $ 426 $ -- $ 2,467
Interest-bearing deposits............. 5,758 3,835 -- 9,593
------- ------ ----- -------
Total deposits.................... 7,799 4,261 -- 12,060
Federal funds purchased and securities
sold under repurchase agreements..... 1,260 33 -- 1,293
Other short-term borrowings........... 242 25 -- 267
Federal Home Loan Bank advances and
other borrowings over one year....... 121 -- -- 121
Long-term debt........................ 276 3 -- 279
Other liabilities..................... 190 58 107 (B) 355
------- ------ ----- -------
Total liabilities................. 9,888 4,380 107 14,375
------- ------ ----- -------
Shareholders' equity:
Preferred stock..................... -- 75 (75)(B) --
Common stock........................ 150 82 31 (B) 263
Surplus............................. -- 267 (267) --
Accumulated other comprehensive
income............................. (1) -- -- (1)
Retained earnings................... 575 82 (82) 575
------- ------ ----- -------
Total shareholders' equity........ 724 506 (393) 837
------- ------ ----- -------
Total liabilities and
shareholders' equity............. $10,612 $4,886 $(286) $15,212
======= ====== ===== =======
</TABLE>

See Notes to Pro Forma Condensed Combined Financial Statements.

11
<PAGE>

ZIONS AND SUMITOMO
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997 (A)
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL
--------------- PRO FORMA PRO FORMA
ZIONS SUMITOMO ADJUSTMENTS COMBINED
------ -------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans and
leases............................. $426.3 $315.4 $ 1.1 (B) $ 742.8
Interest on money market
investments........................ 84.6 37.7 (24.3)(B) 98.0
Interest on securities.............. 171.4 33.8 -- 205.2
------ ------ ------ --------
Total interest income............. 682.3 386.9 (23.2) 1,046.0
------ ------ ------ --------
Interest expense:
Interest on deposits................ 180.4 169.9 -- 350.3
Interest on borrowed funds.......... 150.1 13.1 -- 163.2
------ ------ ------ --------
Total interest expense............ 330.5 183.0 -- 513.5
------ ------ ------ --------
Net interest income............... 351.8 203.9 (23.2) 532.5
Provision for loan losses........... 6.2 16.5 -- 22.7
------ ------ ------ --------
Net interest income after provision
for loan losses.................... 345.6 187.4 (23.2) 509.8
------ ------ ------ --------
Noninterest income:
Service charges on deposit
accounts........................... 43.7 5.0 -- 48.7
Other service charges, commissions
and fees........................... 38.3 2.1 -- 40.4
Trust income........................ 6.8 3.7 -- 10.5
Loan sales and servicing income..... 38.8 -- -- 38.8
Other............................... 15.6 13.4 -- 29.0
------ ------ ------ --------
Total noninterest income.......... 143.2 24.2 -- 167.4
------ ------ ------ --------
Noninterest expense:
Salaries and employee benefits...... 160.0 81.3 -- 241.3
Occupancy, net...................... 16.9 15.9 -- 32.8
Furniture and equipment............. 23.7 7.6 -- 31.3
Amortization of goodwill and core
deposit intangibles................ 5.9 -- 8.5 (C) 14.4
Other............................... 94.7 45.2 2.1 (B) 142.0
------ ------ ------ --------
Total noninterest expense......... 301.2 150.0 10.6 461.8
------ ------ ------ --------
Income before income taxes............ 187.6 61.6 (33.8) 215.4
Income taxes.......................... 65.2 20.4 (11.1) 74.5
------ ------ ------ --------
Net income............................ $122.4 $ 41.2 $(22.7) $ 140.9
====== ====== ====== ========
Net income applicable to common
stock................................ $122.3 $ 35.1 $(22.7) $ 134.7
====== ====== ====== ========
Operating cash earnings applicable to
common stock......................... $130.0 $ 35.1 -- $ 148.4
====== ====== ========
Net income per common share
(diluted)............................ $ 1.89 $ 2.01
Operating cash earnings per common
share (diluted)...................... 2.01 2.21
Weighted-average common and common-
equivalent shares outstanding during
the year (in thousands).............. 64,629 67,029(B)
====== ========
</TABLE>

See Notes to Pro Forma Condensed Combined Financial Statements.

12
<PAGE>

ZIONS AND SUMITOMO
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (A)
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL
--------------- PRO FORMA PRO FORMA
ZIONS SUMITOMO ADJUSTMENTS COMBINED
------ -------- ----------- ---------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans and
leases............................. $131.0 $80.0 $ 0.3 (B) $211.3
Interest on money market
investments........................ 22.6 6.7 (6.2)(B) 23.1
Interest on securities.............. 48.1 7.2 -- 55.3
------ ----- ----- ------
Total interest income.............. 201.7 93.9 (5.9) 289.7
------ ----- ----- ------
Interest expense:
Interest on deposits................ 58.2 42.2 -- 100.4
Interest on borrowed funds.......... 35.5 1.5 -- 37.0
------ ----- ----- ------
Total interest expense............. 93.7 43.7 -- 137.4
------ ----- ----- ------
Net interest income................ 108.0 50.2 (5.9) 152.3
Provision for loan losses............. 3.3 2.0 -- 5.3
------ ----- ----- ------
Net interest income after provision
for loan losses................... 104.7 48.2 (5.9) 147.0
------ ----- ----- ------
Noninterest income:
Service charges on deposit accounts. 13.0 1.2 -- 14.2
Other service charges, commissions
and fees........................... 10.9 2.7 -- 13.6
Trust income........................ 1.6 0.9 -- 2.5
Loan sales and servicing income..... 11.5 -- -- 11.5
Other............................... 6.8 1.0 -- 7.8
------ ----- ----- ------
Total noninterest income........... 43.8 5.8 -- 49.6
------ ----- ----- ------
Noninterest expense:
Salaries and employee benefits...... 49.9 22.3 -- 72.2
Occupancy, net...................... 5.4 4.1 -- 9.5
Furniture and equipment............. 7.5 1.9 -- 9.4
Amortization of goodwill and core
deposit intangibles................ 2.3 -- 2.1 (C) 4.4
Other............................... 30.4 14.3 0.1 (B) 44.8
------ ----- ----- ------
Total noninterest expense.......... 95.5 42.6 2.2 140.3
------ ----- ----- ------
Income before income taxes............ 53.0 11.4 (8.1) 56.3
Income taxes.......................... 16.6 4.0 (2.8) 17.8
------ ----- ----- ------
Net income......................... $ 36.4 $ 7.4 $(5.3) $ 38.5
====== ===== ===== ======
Net income applicable to common stock. $ 36.4 $ 5.9 $(5.3) $ 37.0
====== ===== ===== ======
Operating cash earnings applicable to
common stock......................... $ 40.2 $ 5.9 $ 42.4
====== ===== ======
Net income per common share diluted
(diluted)............................ $ 0.52 $ 0.51
Operating cash earnings per common
share (diluted)...................... 0.57 0.58
Weighted-average common and common-
equivalent shares outstanding during
the year (in thousands).............. 70,159 72,559(B)
====== ======
</TABLE>

See Notes to Pro Forma Condensed Combined Financial Statements.

13
<PAGE>

ZIONS AND SUMITOMO

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE A: BASIS OF PRESENTATION

The unaudited pro forma condensed combined balance sheet as of March 31,
1998 combines the historical consolidated balance sheet of Zions and the
historical balance sheet of Sumitomo as if the Sumitomo Acquisition and the
issuance of shares of Common Stock offered hereby had taken place on March 31,
1998. The pro forma condensed combined statements of income for the year ended
December 31, 1997 and for the three months ended March 31, 1998 combine the
historical consolidated statements of income for Zions and the historical
statements of income for Sumitomo as if the Sumitomo Acquisition had been
consummated on January 1, 1997. As a result of the Company's acquisition on
January 6, 1998 of Vectra and its subsidiary, Vectra Bank, the Company has
restated its financial statements as of and for the three months ended March
31, 1997 and as of and for the year ended December 31, 1997. For the purpose
of comparability with the other financial information contained herein, the
pro forma condensed combined statement of income for the year ended December
31, 1997 has not been restated to reflect such transaction.

The Sumitomo Acquisition reflected in the pro forma financial statements
will be accounted for as a purchase. Under this method of accounting, assets
and liabilities of Sumitomo will be adjusted to their estimated fair value and
combined with the recorded values of the assets and liabilities of Zions. For
purposes of the pro forma financial statements, it has been assumed that the
net book value of Sumitomo's assets minus liabilities approximates fair value.

NOTE B: PURCHASE PRICE AND FUNDING

The purchase price is based upon cash consideration of approximately $546
million to be paid for the outstanding shares of Sumitomo. Sumitomo's parent,
The Sumitomo Bank, Limited, will receive approximately $453 million ($32.36
per share) and the other shareholders will receive approximately $93 million
($38.25 per share).

The transaction is to be financed through a combination of existing
resources, the sale of a minority interest in Sumitomo and the proceeds from
the issuance of the shares being offered hereby: (in millions)

<TABLE>
<S> <C>
Issuance of Common Stock for cash, net of estimated issuance costs of
$5................................................................... $113
Reduction of money market investment balances......................... 401
Proceeds from sale of minority interest in Sumitomo................... 32
----
Total purchase price................................................ $546
====
</TABLE>

Zions expects to enter into an agreement to sell a minority interest of
Sumitomo to Robert G. Sarver, a director of Zions and chairman of Grossmont
Bank, and to a limited partnership of which Mr. Sarver is the general partner,
at its cost basis. See "Business--Recent Developments; Sumitomo Acquisition".
Proceeds from the sale of the minority interest will be approximately $32
million for an approximate 10.8% common equity interest in Sumitomo after the
payment of a planned $250 million dividend by Sumitomo to Zions. The pro forma
condensed combined statements of income for the year ended December 31, 1997
and the three months ended March 31, 1998 include pro forma adjustments to
other non-interest expense of $2.1 million and $0.1 million, respectively, for
the minority shareholder's estimated 10.8% portion of Sumitomo's pro forma net
income applicable to common stock. Pro forma adjustments to the condensed
combined balance sheet as of March 31, 1998 include an increase in other
liabilities of $107 million, consisting of the $32 million minority interest
discussed above and the redemption of $75 million of Sumitomo preferred stock.

14
<PAGE>

ZIONS AND SUMITOMO

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Zions intends to enter into such agreement with Mr. Sarver in order to
provide an appropriate incentive to expand Zions' California banking
operations and distribution network. Pursuant to the agreement, Mr. Sarver
will serve as the chief executive officer of the California Subsidiary to be
created from the combination of Grossmont Bank, Sumitomo and First Pacific.
While such minority equity interest represents approximately 10.8% of
Sumitomo, it will amount to approximately 5% of the equity interest in the
California Subsidiary after such combination. As part of the agreement, Mr.
Sarver and a limited partnership will together acquire such 5% equity interest
for its cost basis, or approximately $32 million. Mr. Sarver is the general
partner of the limited partnership, and the limited partners of such
partnership include, among others, individuals who are currently senior
officers of Grossmont Bank and who will be senior officers of the California
Subsidiary.

Zions also intends to finance a portion of the investment being made by Mr.
Sarver. Zions will lend to Mr. Sarver approximately $14.5 million, which loan
will be non-recourse to Mr. Sarver and will be secured by the 2.5% equity
interest in the California Subsidiary held by Mr. Sarver and by 200,000 shares
of Common Stock owned by Mr. Sarver. Such loan will bear interest at 200 basis
points over the five-year U.S. treasury rate, compound annually and be payable
at maturity in 2003. At such time, for a period of 90 days, Mr. Sarver and the
limited partnership will have the right to put to Zions their equity interest
in the California Subsidiary at a price to be determined by Mr. Sarver and
Zions at such time.

The pro forma condensed combined statements of income for the year ended
December 31, 1997 and the three months ended March 31, 1998 include pro forma
adjustments of $1.1 million and $0.3 million, respectively, which represent
increases in interest and fees on loans for the interest income on the loan to
Mr. Sarver. The pro forma condensed combined balance sheet also reflects
positive adjustments to loans, net of unearned and negative adjustments to
money market investments in connection with the funding of the loan to Mr.
Sarver.

Money market investments have been reduced on the pro forma condensed
combined balance sheet by $416 million, $401 million of which represents a
portion of the total pro forma cash purchase price and $15 million of which
represents the funding of the loan to Mr. Sarver. Interest on money market
investments in the pro forma condensed combined statements of income for the
year ended December 31, 1997 and the three months ended March 31, 1998 has
been reduced by $24.3 million and $6.2 million, respectively, representing the
lost interest on the money market investments determined using the combined
average rate earned on money market investments during such periods.

Pro forma weighted-average common shares outstanding during the year ended
December 31, 1997 and the three months ended March 31, 1998 and pro forma
weighted-average common and common-equivalent shares outstanding during the
year ended December 31, 1997 and the three months ended March 31, 1998 have
been increased to reflect the issuance of the shares of Common Stock offered
hereby.

NOTE C: PURCHASE PREMIUM

The purchase premium resulting from the Sumitomo Acquisition reflected in
the accompanying pro forma condensed combined balance sheet was determined as
follows: (in millions)

<TABLE>
<S> <C>
Total cash consideration paid for common stock of Sumitomo............. $546
Common shareholders' equity of Sumitomo................................ 431
----
Total purchase premium............................................... 115
Deferred tax adjustment for portion of premium allocable to core
deposits.............................................................. 20
----
Total pro forma adjustment........................................... $135
====
</TABLE>

15
<PAGE>

ZIONS AND SUMITOMO

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS--(CONTINUED)

For purposes of these pro forma condensed combined financial statements, it
has been assumed that the net book value of Sumitomo's assets minus
liabilities approximates fair value. Accordingly, the cost of the acquisition
in excess of Sumitomo's common equity is reflected in the accompanying
pro forma condensed combined balance sheet as purchase premium. The purchase
premium in the accompanying pro forma condensed combined balance sheet has
been increased and net deferred tax assets decreased by $20 million to tax
effect the estimated portion of the premium allocable to core deposit premium.
The amortization of the purchase premium in the pro forma condensed combined
statements of income in the amount of $8.5 million for the year ended December
31, 1997 and $2.1 million for the three months ended March 31, 1998 has been
determined using an estimated blended amortization life of approximately 16
years. Certain matters are still pending that will have an effect on the
ultimate allocation of the purchase price. Accordingly, the allocation of the
purchase price has not been finalized.

16
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain selected consolidated financial and
operating data for the Company as of and for each of the five years in the
period ended December 31, 1997 and as of and for the three months ended March
31, 1998 and 1997. The Company's consolidated financial statements as of and
for each of the five years in the period ended December 31, 1997 have been
audited by KMPG Peat Marwick LLP, the Company's independent certified public
accountants. As a result of the Company's acquisition on January 6, 1998 of
Vectra and its subsidiary, Vectra Bank, the Company has restated its financial
statements as of and for the three months ended March 31, 1997 and as of and
for the year ended December 31, 1997. See the Company's unaudited Consolidated
Financial Statements and Notes thereto in the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1998, incorporated by reference
herein. For the purpose of comparability, the financial information as of and
for the year ended December 31, 1997 included in this Prospectus does not
reflect such restatement. All of the data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------- ----------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF INCOME:
Interest income......... $293.6 $354.0 $439.5 $519.0 $682.3 $ 160.1 $ 201.7
Interest expense........ 119.0 155.4 205.9 229.9 330.5 77.2 93.7
------ ------ ------ ------ ------ ------- -------
Net interest income.... 174.6 198.6 233.6 289.1 351.8 82.9 108.0
Provision for loan
losses................. 3.0 2.2 3.0 4.6 6.2 1.8 3.3
------ ------ ------ ------ ------ ------- -------
Net interest income
after provision for
loan losses........... 171.6 196.4 230.6 284.5 345.6 81.1 104.7
Noninterest income...... 79.9 73.2 88.8 114.3 143.2 34.1 43.8
Noninterest expense..... 167.8 174.9 195.2 235.3 301.2 68.2 95.5
------ ------ ------ ------ ------ ------- -------
Income before income
taxes and cumulative
effect of changes in
accounting principles. 83.7 94.7 124.2 163.5 187.6 47.0 53.0
Income taxes............ 27.2 30.9 41.8 56.1 65.2 16.4 16.6
------ ------ ------ ------ ------ ------- -------
Income before
cumulative effect of
changes in accounting
principles............ 56.5 63.8 82.4 107.4 122.4 30.6 36.4
Cumulative effect of
changes in accounting
principles............. 1.7 -- -- -- -- -- --
------ ------ ------ ------ ------ ------- -------
Net income.............. $ 58.2 $ 63.8 $ 82.4 $107.4 $122.4 $ 30.6 $ 36.4
====== ====== ====== ====== ====== ======= =======
Operating cash
earnings(1)............ $ 59.6 $ 65.5 $ 84.7 $110.2 $130.0 $ 31.5 $ 40.2
====== ====== ====== ====== ====== ======= =======
Net income per common
share (diluted)........ $ 1.02 $ 1.09 $ 1.37 $ 1.68 $ 1.89 $ 0.45 $ 0.52
Operating cash earnings
per common share
(diluted)(1)........... 1.04 1.12 1.41 1.72 2.01 0.46 0.57
Dividends declared...... 0.2450 0.2900 0.3525 0.4250 0.4700 0.11 0.12
Weighted-average common
and common-equivalent
shares outstanding
during the year (in
thousands)............. 57,120 58,404 60,013 63,787 64,629 68,025 70,159
CONSOLIDATED BALANCE
SHEET DATA:
Loans(2)................ $2,486 $2,391 $3,068 $3,837 $4,872 $4,450 $5,650
Total assets............ 4,801 4,934 6,096 7,116 9,522 8,509 10,612
Deposits................ 3,432 3,706 4,511 5,120 6,854 5,729 7,799
Total shareholders'
equity................. 313 366 470 555 655 592 724
OTHER DATA:
Return on average
assets................. 1.25% 1.17% 1.43% 1.55% 1.33% 1.41% 1.35%
Operating cash return on
average assets(1)...... 1.29 1.20 1.47 1.60 1.43 1.46 1.51
Return on average common
equity................. 20.33 18.82 20.22 20.95 19.88 20.75 20.84
Operating cash return on
average common
equity(1).............. 21.94 20.54 22.08 23.26 25.34 23.52 30.27
Efficiency ratio........ 64.89 63.25 59.56 57.29 60.02 57.40 61.71
Operating cash
efficiency ratio(1).... 64.19 62.53 58.77 56.60 58.32 56.61 58.96
Net interest margin..... 4.23 4.07 4.53 4.68 4.27 4.22 4.51
Nonperforming assets to
net loans and leases
and nonperforming
assets................. 1.23 0.79 0.41 0.36 0.33 0.40 0.36
Allowance for loan
losses to nonperforming
loans.................. 250.13 471.89 660.17 566.35 638.84 524.70 509.50
Tier I leverage......... 5.44 6.24 6.33 8.70 6.75 8.09 6.89
Tier I risk-based
capital................ 10.85 11.81 11.33 14.16 11.74 13.95 11.73
Total risk-based
capital................ 14.12 14.96 14.03 17.52 13.75 16.52 13.62
</TABLE>
- --------
(1) Operating cash earnings represents earnings before amortization of
goodwill and core deposit intangible assets and merger expense.
(2) Net of unearned income and fees, net of related costs.

17
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following analysis of the Company's financial condition and results of
operations as of and for the years ended December 31, 1997 and 1996 should be
read in conjunction with the audited Consolidated Financial Statements and
Notes thereto of the Company and the detailed information presented elsewhere
herein. The financial data as of and for the years ended December 31, 1997 and
1996 included herein is derived from the Company's audited Consolidated
Financial Statements and Notes thereto, included elsewhere in this Prospectus.
As a result of the Company's acquisition on January 6, 1998 of Vectra and its
subsidiary, Vectra Bank, the Company has restated its financial statements as
of and for the three months ended March 31, 1997 and as of and for the year
ended December 31, 1997 in accordance with generally accepted accounting
principles. For more information, see the Company's unaudited Consolidated
Financial Statements and Notes thereto incorporated by reference herein from
the Company's Quarterly Report on Form 10-Q for the period ended March 31,
1998. For the purpose of comparability, the financial data as of and for the
year ended December 31, 1997 included herein does not reflect such
restatement.

PERFORMANCE SUMMARY

The Company achieved record earnings of $122.4 million or $1.89 per fully-
diluted share in 1997. Net income and earnings per share increased 13.9% and
12.5%, respectively, over the $107.4 million or $1.68 per share for 1996. The
return on average common equity was 19.88% and the return on average assets
was 1.33% for 1997. Financial results have been restated for prior periods to
reflect the acquisition of GB Bancorporation, the former parent company of
Grossmont Bank, during the last quarter of 1997, which was accounted for as a
pooling of interests, and a four-for-one split of the Common Stock during the
second quarter of 1997.

The Company also provides its earnings performance on an operating cash
basis since it believes that its cash operating performance is a better
reflection of its financial position and shareholder value creation as well as
its ability to support growth, pay dividends and repurchase stock than is
reported net income. Operating cash earnings are earnings before the
amortization of goodwill and core deposit intangible assets and merger
expense.

Operating cash earnings for 1997 were $130.0 million or $2.01 per share, an
increase of 18.0% and 16.9%, respectively, over the $110.2 million or $1.72
per share for 1996. The return on average common equity and the return on
average assets on an operating cash basis were 25.34% and 1.43%, respectively,
for 1997.

The record growth of the Company in 1997 was driven by acquisitions and
internal growth and expansion. The number of full-time equivalent employees
increased to 4,347 at year-end 1997 from 3,343 at year-end 1996, banking
offices increased to 228 from 153 and ATMs increased to 485 from 339. In 1997,
average loans and leases grew by 26.5% and total earning assets grew by 32.7%,
leading to a 21.0% increase in taxable-equivalent net interest income to
$358.7 million. Noninterest income increased 25.3% to $143.2 million in 1997,
with strong growth in all categories. Noninterest expense increased 28.0% to
$301.2 million in 1997. The increase in noninterest expense is mainly
attributable to the growth of the Company during 1997 and increased
expenditures related to technology initiatives. The higher expenses resulted
in an increase in the Company's efficiency ratio, or noninterest expenses as a
percentage of total taxable-equivalent net revenues, to 60.02% for 1997
compared to 57.29% for 1996. The operating cash efficiency ratio was 58.32%
for 1997 compared to 56.60% for 1996.

18
<PAGE>

REVIEW OF OPERATIONS

SUBSIDIARY BANKS

Zions is a bank holding company that, as of December 31, 1997, operated 228
branches in the seven western states of Arizona, California, Colorado, Idaho,
Nevada, New Mexico and Utah. The Company's community banks operate with
regional brand identities and strong local management teams who possess
substantial decision-making authority.

ZIONS FIRST NATIONAL BANK. Zions First National Bank and its subsidiaries
("ZFNB") experienced growth in 1997 as operating cash earnings increased 7.0%
to $89.5 million as compared to $83.6 million in 1996, and net income
increased 6.5% to $88.6 million compared to $83.1 million in 1996. The
increases were the result of a $18.1 million increase in net interest income
and a $20.0 million increase in noninterest income partially offset by a $28.2
million increase in noninterest expense. ZFNB's operating cash efficiency
ratio was 56.85% in 1997 as compared to 54.50% in 1996.

ZFNB opened 12 new grocery store banking centers in Utah and acquired three
traditional branches, bringing the total number of branches in Utah to 114,
including 38 grocery store banking centers. During 1997, ZFNB also acquired 12
traditional branches and opened two new grocery store banking centers and one
new traditional branch for a total of 15 branches in Idaho.

Zions Mortgage Company, a subsidiary of ZFNB, contributed net income of $0.8
million in 1997 compared to $1.4 million in 1996. Zions Mortgage Company
experienced mortgage origination volume of $396.1 million in 1997,
approximately the same as in 1996. On December 31, 1997, Zions Mortgage
Company serviced for others long-term first mortgage real estate loans in the
amount of $1,896.8 million compared to $1,542.0 million on December 31, 1996.

Zions Credit Corporation, also a subsidiary of ZFNB, contributed net income
of $0.046 million in 1997. Zions Credit Corporation generated $63.1 million in
new lease volume and brokered to third parties an additional $8.5 million in
leases in 1997 compared to $78.6 million and $3.1 million, respectively, in
1996. Average lease receivables and conditional sales contracts serviced by
Zions Credit Corporation increased 10.2% to $187.3 million in 1997 compared to
$170.0 million in 1996.

ZFNB's brokerage subsidiary, Zions Investment Securities, Inc., contributed
$1.2 million in pretax income and revenue sharing to the Company's banking
operations in 1997 compared to $0.9 million in 1996. Net income of Zions
Investment Securities, Inc., which is included in that of ZFNB, was
$0.5 million in 1997, a 41.6% increase from $0.4 million in 1996. Zions
Investment Securities, Inc. has 42 registered investment advisors who offer a
full range of brokerage services and products.

Wasatch Venture Corporation, a small business investment company which is a
subsidiary of ZFNB and an affiliated company of National Bank of Arizona,
contributed net income of $1.2 million in 1997 as compared to $0.4 million in
1996. On December 31, 1997, Wasatch had investments in 28 entities totaling
approximately $20 million.

NEVADA STATE BANK. Nevada State Bank achieved operating cash earnings of
$11.0 million in 1997, an increase of 50.8% over $7.3 million in 1996, and net
income increased 47.4% to $10.7 million as compared to $7.3 million in 1996.
The increase resulted from a revenue increase of $14.4 million, partially
offset by a $0.3 million increase in the provision for loan losses, a $8.6
million increase in noninterest expense, a $1.8 million increase in income
taxes and a $0.3 million increase in net after tax expense for amortization of
goodwill and core deposit intangibles. Nevada State Bank's operating cash
efficiency ratio improved to 63.10% in 1997 as compared to 64.67% in 1996.
During 1997, Nevada State Bank opened one new grocery store banking center and
four traditional branches and added 10 traditional branches from acquisitions,
bringing the total number of branches in Nevada to 40, including 19 grocery
store banking centers.

19
<PAGE>

NATIONAL BANK OF ARIZONA. Operating cash earnings at National Bank of
Arizona increased 21.9% to $19.2 million in 1997 as compared to $15.8 million
in 1996, and net income was $17.8 million in 1997 as compared to $14.7 million
in 1996, a 21.5% increase. The increase resulted from a revenue increase of
$13.8 million partially offset by a $0.1 million increase in the provision for
loan losses, a $7.9 million increase in noninterest expense, a $2.4 million
increase in income taxes and a $0.3 million increase in net after tax expense
for amortization of goodwill and core deposit intangibles. National Bank of
Arizona's operating cash efficiency ratio was 49.86% in 1997 as compared to
47.97% in 1996. In 1997, National Bank of Arizona opened two new branches and
added 11 branches by acquisition, bringing its total number of branches in
Arizona to 30.

COLORADO BANKS. The Colorado banks consist of the following banking entities
acquired on May 16, 1997 in the merger with Aspen Bancshares, Inc.: Pitkin
County Bank and Trust, Centennial Savings Bank, F.S.B. and Valley National
Bank of Cortez. Combined operating cash earnings for the Colorado banks were
$3.7 million and net income was $2.2 million after deducting $1.5 million of
expense for amortization of goodwill for the period May 17 through December
31, 1997. The Colorado banks' combined operating cash efficiency ratio in 1997
since acquisition was 60.62%. The combined branches include one grocery store
banking center, 12 traditional branches in Colorado and one traditional branch
in New Mexico.

GROSSMONT BANK. Grossmont Bank experienced strong growth in 1997 as
operating cash earnings increased 69.5% to $11.9 million as compared to $7.0
million in 1996, and net income increased 74.7% to $11.4 million as compared
to $6.6 million in 1996. The increase resulted from a net revenue increase of
$13.2 million partially offset by a $1.4 million increase in the provision for
loan losses, a $3.9 million increase in noninterest expense and a $3.0 million
increase in income taxes. Grossmont Bank's operating cash efficiency ratio
improved to 52.76% in 1997 as compared to 60.73% in 1996. During 1997, the
number of Grossmont Bank's branches increased by three for a total of 15
branches.

SELECTED FINANCIAL DATA FOR BANKING SUBSIDIARIES AND ZIONS. The following
table sets forth selected financial data for the Company's banking
subsidiaries and the Company as a whole:

<TABLE>
<CAPTION>
NATIONAL
NEVADA BANK OF COLORADO GROSSMONT CONSOLIDATED
ZFNB STATE BANK ARIZONA BANKS BANK COMPANY
------ ---------- -------- -------- --------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
TOTAL REVENUE
1996................... $281.6 $34.5 $ 54.1 -- $32.8 $403.4
1997................... 319.8 49.0 67.8 $14.7 46.0 495.0
% Change............... 13.5% 41.9% 25.5% -- 40.2% 22.7%
NET INCOME
1996................... $ 83.1 $ 7.3 $ 14.7 -- $ 6.6 $107.4
1997................... 88.6 10.7 17.8 $ 2.2 11.4 122.4
% Change............... 6.5% 47.4% 21.5% -- 74.7% 13.9%
OPERATING CASH EARNINGS
1996................... $ 83.6 $ 7.3 $ 15.8 -- $ 7.0 $110.2
1997................... 89.5 11.0 19.2 $ 3.7 11.9 130.0
% Change............... 7.0% 50.8% 21.9% -- 69.5% 18.0%
TOTAL AVERAGE ASSETS
1996................... $4,945 $ 526 $ 908 -- $ 534 $6,914
1997................... 6,341 716 1,122 $ 310 721 9,214
% Change............... 28.2% 36.0% 23.6% -- 34.9% 33.3%
RETURN ON AVERAGE ASSETS
1996................... 1.68% 1.38% 1.62% -- 1.23% 1.55%
1997................... 1.40 1.49 1.59 0.71% 1.59 1.33
OPERATING CASH
EFFICIENCY RATIO
1996................... 54.50% 64.67% 47.97% -- 60.73% 56.60%
1997................... 56.85 63.10 49.86 60.62% 52.76 58.32
</TABLE>

20
<PAGE>

OTHER SUBSIDIARIES

Zions Insurance Agency, Inc. and Zions Life Insurance Company produced net
income of $1.0 million in 1997 as compared to $1.4 million in 1996. Zions Data
Service Company engaged in a number of significant projects in 1997, including
the installation of a new general ledger system based upon client server
technology. Zions Data Service Company also installed a new cash management
system and new consumer lending and ATM systems in 1997. Cash Access, Inc., a
new subsidiary of the Company created in 1996 to provide an ATM network of
cash dispensing ATMs to be installed in convenience stores, service stations,
hotels and other businesses, installed an additional 105 ATMs in 1997 for a
total of 145 ATMs.

SUBSEQUENT ACQUISITIONS

On January 6, 1998, the Company acquired Vectra Banking Corporation
("Vectra") and its banking subsidiary, Vectra Bank, located in Denver,
Colorado, in exchange for Common Stock (the "Vectra Merger"). The Vectra
Merger will be accounted for as a pooling of interests. Vectra's total assets
and total deposits were approximately $728 million and $556 million,
respectively, on the acquisition date.

On January 23, 1998, the Company acquired Sky Valley Bank Corp. ("Sky
Valley") in Alamosa, Colorado, and its banking subsidiary, The First National
Bank in Alamosa, in exchange for Common Stock (the "Sky Valley Merger"). The
Sky Valley Merger will be accounted for as a pooling of interests. Sky
Valley's total assets and total deposits were approximately $122 million and
$108 million, respectively, on the acquisition date.

On February 27, 1998, the Company acquired Tri-State Finance Corporation
("Tri-State") and its banking subsidiary, Tri-State Bank, in Denver, in
exchange for Common Stock (the "Tri-State Merger"). Tri-State's total assets
and total deposits were approximately $128 million and $117 million,
respectively, on the acquisition date. The Tri-State Merger will be accounted
for as a pooling of interests.

On May 22, 1998, the Company acquired FP Bancorp, Inc. ("FP") and its
banking subsidiary, First Pacific, in Escondido, California, in exchange for
Common Stock. On December 31, 1997, FP had total assets of approximately
$353 million and total deposits of $311 million. The transaction will be
accounted for as a pooling of interests.

On June 1, 1998, the Company acquired SBT and its banking subsidiary, State
Bank and Trust of Colorado Springs, Colorado, in exchange for Common Stock. On
December 31, 1997, SBT had total assets of approximately $86 million and total
deposits of $78 million. The transaction will be accounted for as a pooling of
interests.

On June 1, 1998, the Company acquired Routt and its banking subsidiary,
First National Bank of Colorado in Steamboat Springs, Colorado, in exchange
for Common Stock. On December 31, 1997, Routt had total assets of
approximately $93 million and total deposits of $83 million. The transaction
will be accounted for as a pooling of interests.

On May 8, 1998, the Company announced that a definitive agreement had been
reached to acquire Kersey and its banking subsidiary, Independent Bank,
located in northeastern Colorado, in exchange for Common Stock. At March 31,
1998, Kersey's total assets were approximately $135 million. The Kersey Merger
is intended to be accounted for as a pooling of interests and is expected to
close in the third quarter of 1998.

On May 14, 1998, the Company announced that a definitive agreement had been
reached to acquire Commerce and its banking subsidiary, The Commerce Bank of
Washington, N.A., located in

21
<PAGE>

Seattle, Washington, in exchange for Common Stock. The Commerce Merger is
intended to be accounted for as a pooling of interests and is expected to
close in the third quarter of 1998.

On May 15, 1998, the Company announced that a definitive agreement had been
reached to acquire Mountain and its banking subsidiary, Mountain National
Bank, located in Woodland Park and Cripple Creek, Colorado, in exchange for
Common Stock. The Mountain Merger is intended to be accounted for as a pooling
of interests and is expected to close in the third quarter of 1998.

INCOME STATEMENT ANALYSIS

NET INTEREST INCOME, MARGIN AND INTEREST RATE SPREADS

Net interest income on a tax-equivalent basis is the difference between
interest earned on assets and interest paid on liabilities, with adjustments
made to present yields on assets exempt from income taxes comparable to other
taxable income. Changes in the mix and volume of earning assets and interest-
bearing liabilities, their related yields and overall interest rates have a
major impact on earnings. In 1997, taxable-equivalent net interest income
provided 71.5% of the Company's net revenues, compared with 72.2% in 1996.

The Company's taxable-equivalent net interest income increased by 21.0% to
$358.7 million in 1997 as compared to $296.4 million in 1996. The increased
level of taxable-equivalent net interest income was driven by growth in
average earning assets in 1997. The Company manages its earnings sensitivity
to interest rate movements, in part, by matching the repricing characteristics
of its assets and liabilities and, to a lesser extent, through the use of off-
balance sheet arrangements such as caps, floors and interest rate exchange
contracts. Net interest income from the use of such off-balance sheet
arrangements for 1997 was $2.5 million compared to $2.0 million in 1996.

The increase in net interest income was partially offset by the continued
securitization and sale of loans. Securitized loan sales convert net interest
income from loans to gains on loan sales and servicing revenue reported in
noninterest income. Loan sales improve the Company's liquidity, limit its
exposure to credit losses and may reduce its capital requirements.

The net interest margin, the ratio of taxable-equivalent net interest income
to average earning assets, was 4.27% in 1997 and 4.68% in 1996. The decrease
in the margin in 1997 was due primarily to interest expense on the $200
million in trust preferred securities issued in December 1996, and increased
arbitrage activity in money market investments and short-term borrowings to
mitigate the reduction in net interest income from the preferred securities.

PROVISION FOR LOAN LOSSES

The provision for loan losses reflects management's judgment of the expense
to be recognized in order to maintain an adequate allowance for loan losses.
The provision for loan losses was $6.2 million in 1997 compared to $4.6
million in 1996. Although the provision has increased in recent years, it
comprised only 0.14% of average loans for each of 1997 and 1996.

NONINTEREST INCOME

Noninterest income is a growing portion of the Company's net revenue,
comprising 28.5% of revenue in 1997 compared to 27.8% in 1996. Noninterest
income was $143.2 million in 1997, an increase of 25.3% over $114.3 million in
1996. Primary contributors to the increase in noninterest income in 1997 were
service charges on deposit accounts, other services charges, commissions and
fees, loan sales and servicing income and trading account income.

22
<PAGE>

The following table presents the components of noninterest income for the
years indicated and a year-to-year comparison expressed in terms of percent
changes.

<TABLE>
<CAPTION>
PERCENT
1996 1997 CHANGE
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Service charges on deposit accounts.................... $ 35.2 $ 43.7 24.3%
Other service charges, commissions and fees............ 28.7 38.3 33.4
Trust income........................................... 5.2 6.8 30.1
Investment securities gains, net....................... 0.1 0.8 593.0
Trading account income, net............................ 2.7 5.7 110.1
Loan sales and servicing income........................ 35.2 38.8 10.4
Other income........................................... 7.2 9.1 26.4
------ ------ -----
Total................................................ $114.3 $143.2 25.3%
====== ====== =====
</TABLE>

NONINTEREST EXPENSE

The Company's noninterest expense was $301.2 million in 1997, an increase of
28.0% over $235.3 million in 1996. In 1997, salaries and employee benefits
increased 23.3% to $160.0 million, occupancy expense increased 23.7% to $16.9
million, furniture and equipment expense increased 38.3% to $23.7 million and
the total of all other expenses increased 34.6% to $100.6 million.

In 1997, salaries and employee benefits increased primarily as a result of
increased staffing, resulting from the acquisition and opening of new branches
and additional investment in personnel in selected areas, as well as general
salary increases and bonuses, commissions and profit-sharing costs which are
based on increased profitability. The occupancy, furniture and equipment
expense increase resulted primarily from the addition of office facilities,
the expansion of ATM networks, installation of personal computers and local
area networks and expenses related to technology initiatives.

The Company's operating cash efficiency ratio, or noninterest expenses
excluding amortization of goodwill and core deposit intangibles and merger
expenses, as a percentage of total taxable-equivalent net revenues, increased
to 58.32% in 1997 compared to 56.60% in 1996.

The following table presents the components of noninterest expense for the
years indicated and a year-to-year comparison expressed in terms of percent
changes.

<TABLE>
<CAPTION>
PERCENT
1996 1997 CHANGE
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Salaries and employee benefits........................... $129.7 $160.0 23.3%
Occupancy, net........................................... 13.7 16.9 23.7
Furniture and equipment.................................. 17.1 23.7 38.3
Other real estate expense................................ (0.3) 0.3 184.2
Legal and professional services.......................... 5.2 7.8 48.0
Supplies................................................. 6.6 8.1 23.2
Postage.................................................. 5.7 6.8 20.6
Advertising.............................................. 5.8 7.4 27.5
F.D.I.C. premiums........................................ -- 0.7 --
Merger expense........................................... -- 2.7 --
Amortization of goodwill and core deposit intangibles.... 2.9 5.9 105.5
Amortization of mortgage servicing assets................ 1.3 2.1 65.7
Loss on early extinguishment of debt..................... -- -- --
Other expenses........................................... 47.6 58.8 23.6
------ ------ -----
Total.................................................. $235.3 $301.2 28.0%
====== ====== =====
</TABLE>

23
<PAGE>

INCOME TAXES

The Company's income tax expense for 1997 was $65.2 million compared to
$56.1 million in 1996. The Company's effective income tax rate was 34.8% in
1997, up slightly from 34.3% in 1996.

QUARTERLY SUMMARY

The following table presents a summary of earnings and end-of-period
balances by quarter for the years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
NET TOTAL TOTAL SHAREHOLDERS'
QUARTER INCOME ASSETS DEPOSITS EQUITY
------- ------ ------ -------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1997:
First................................. $ 28.9 $7,926 $5,289 $553
Second................................ 30.6 8,766 5,799 642
Third................................. 31.5 9,823 6,359 636
Fourth................................ 31.4 9,522 6,855 656
------
Total............................... $122.4
======
1996:
First................................. $ 24.9 $6,692 $4,599 $481
Second................................ 26.4 6,616 4,806 517
Third................................. 27.3 7,356 5,081 536
Fourth................................ 28.8 7,116 5,120 555
------
Total............................... $107.4
======
1995:
First................................. $ 16.0 $5,106 $3,786 $381
Second................................ 20.5 5,664 3,890 392
Third................................. 22.3 6,150 4,517 450
Fourth................................ 23.6 6,096 4,511 470
------
Total............................... $ 82.4
======
</TABLE>

BALANCE SHEET ANALYSIS

EARNING ASSETS

Earning assets consist of money market investments, securities and loans.
Average earning assets increased 32.7% to $8,408 million in 1997 compared to
$6,334 million in 1996. Earning assets comprised 91.2% of total average assets
in 1997 compared with 91.6% in 1996. Average money market investments,
consisting of interest-bearing deposits, federal funds sold and security
resell agreements increased 61.4% to $1,491 million in 1997 compared to $924
million in 1996. Average securities increased 30.2% to $2,575 million in 1997,
compared to $1,978 million in 1996. Average held to maturity securities
increased 34.4% to $1,843 million, available for sale securities increased
1.4% to $457 million and trading account securities increased 76.3% to $276
million.

Average net loans and leases increased 26.5% to $4,342 million in 1997
compared to $3,432 million in 1996, representing 51.6% of earning assets in
1997 compared to 54.2% in 1996. Average net loans and leases were 75.1% of
average total deposits in 1997, as compared to 72.5% in 1996.

24
<PAGE>

LOAN PORTFOLIO

During 1997, the Company consummated securitized loan sales of automobile
loans, credit card receivables, home equity credit lines, Small Business
Administration ("SBA") and Farmer Mac loans totaling $951 million. The Company
also sold $733 million of long-term residential mortgage loans, SBA loans,
Farmer Mac loans and student loans classified as held for sale. After these
sales, loans and leases on December 31, 1997 totaled $4,914 million, an
increase of 26.7% compared to $3,878 million on December 31, 1996. Included in
this increase are loans from acquisitions totaling $465 million. Loans held
for sale on December 31, 1997 increased 18.7% from year-end 1996. Comparing
year-end 1997 with year-end 1996, commercial loans, real estate loans,
consumer loans and lease financing increased 34.6%, 22.0%, 34.5% and 10.4%,
respectively.

The table that follows sets forth the amount of loans outstanding by type on
December 31 for the years indicated.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Loans held for sale.......................... $ 238 $ 109 $ 126 $ 151 $ 179
Commercial, financial and agricultural....... 512 496 780 904 1,217
Real estate:
Construction............................... 213 218 286 347 483
Home equity credit line.................... 160 40 108 183 140
1-4 family residential..................... 367 452 451 580 712
Other real estate--secured................. 496 571 848 1,206 1,490
------ ------ ------ ------ ------
Total real estate........................ 1,236 1,281 1,693 2,316 2,825
------ ------ ------ ------ ------
Consumer..................................... 379 391 358 335 450
Lease financing.............................. 130 129 132 160 176
Other receivables............................ 13 10 11 12 67
------ ------ ------ ------ ------
Total loans.................................. $2,508 $2,416 $3,100 $3,878 $4,914
====== ====== ====== ====== ======
</TABLE>

On December 31, 1997, long-term first mortgage real estate loans serviced
for others amounted to $1,897 million compared to $1,542 million on December
31, 1996. Consumer and other loan securitizations serviced, which relate
primarily to loans sold under revolving securitization structures, totaled
$1,050 million on December 31, 1997 and $868 million on December 31, 1996.

OTHER ASSETS

Included in other assets are the Company's investments in affiliated
companies. The Company or its subsidiaries owns stock of the Farmer Mac and
MACC Private Equities Inc. ("MACC") that it accounts for using the equity
method. On December 31, 1997, the book and market value of the Farmer Mac
stock were $15 million and $36 million, respectively. On December 31, 1997,
the book and market value of the MACC stock were $1.7 million and $1.6
million, respectively. For 1997, the Company recognized income of $0.1 million
from its Farmer Mac investment and a loss of $0.3 million from its investment
in MACC.

DEPOSITS

Total average deposits increased 22.2% to $5,783 million in 1997 from $4,732
million in 1996. Average noninterest-bearing deposits increased 27.3%, average
savings and NOW deposits increased 12.9%, average money market and super NOW
deposits increased 21.0% and average time deposits under $100,000 increased
20.2%. Average time deposits over $100,000 increased 45.8% over 1996

25
<PAGE>

average balances and average foreign deposits increased 17.2% during 1997, as
compared with 1996. Total deposits increased 33.9% to $6,855 million on
December 31, 1997 as compared to $5,120 million on December 31, 1996. Included
in this increase are deposits from acquisitions totaling $981 million.
Comparing December 31, 1997 to December 31, 1996, demand deposits increased
32.5%, savings and money market deposits increased 28.3%, time deposits under
$100,000 increased 41.5%, while time deposits over $100,000 increased 69.4%
and foreign deposits increased 60.2%.

The following table sets forth average deposit amounts and average rates for
the years indicated.

<TABLE>
<CAPTION>
1996 1997
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Average amounts:
Noninterest-bearing demand deposits......................... $1,079 $1,373
Savings and NOW deposits.................................... 646 730
Money market and super NOW deposits......................... 1,946 2,354
Time deposits under $100,000................................ 725 872
Time deposits $100,000 or more.............................. 216 314
Foreign deposits............................................ 121 142
------ ------
Total average amounts..................................... $4,732 $5,783
====== ======
Average rates:
Savings and NOW deposits.................................... 3.08% 2.95%
Money market and super NOW deposits......................... 3.70 3.80
Time deposits under $100,000................................ 5.22 5.17
Time deposits $100,000 or more.............................. 5.67 5.75
Foreign deposits............................................ 4.46 4.49
Total..................................................... 4.03 4.09
Maturities of time deposits $100,000 or more at December 31,
1997:
Under three months.......................................... $ 147
Over three months and less than six months.................. 83
Over six months and less than twelve months................. 103
Over twelve months.......................................... 75
------
Total time deposits $100,000 or more...................... $ 409
======
</TABLE>

LONG-TERM DEBT

Long-term debt is primarily comprised of $200 million of 8.536% Guaranteed
Preferred Beneficial Interests in Junior Subordinated Deferrable Interest
Debentures issued by Zions Institutional Capital Trust A in December 1996, and
$7.5 million of 10.25% Guaranteed Preferred Beneficial Interests in Junior
Subordinated Deferrable Interest Debentures (the "GB Capital Securities")
issued by GB Capital Trust in January 1997. With the approval of banking
regulators, the Company has the right to redeem these issues beginning in 2006
and 2007, respectively. These debts mature on December 15, 2026 and January
27, 2027, respectively. Also included in long-term debt is $50 million of 8
5/8% unsecured subordinated notes that mature in 2002. The subordinated notes
are not redeemable prior to maturity.

Federal Home Loan Bank ("FHLB") advances and other borrowings over one year
totalled $211 million as of December 31, 1997, and include $149 million
borrowed by ZFNB under its line of credit with the FHLB of Seattle, $5 million
borrowed by a Company subsidiary from the FHLB of Topeka and a $50 million
senior note issued to a third party in 1997 which matures in October 1999.
There are no withdrawal or usage restrictions on advances from either the FHLB
of Seattle or FHLB of Topeka.

26
<PAGE>

The Company has plans to retire a portion of both the $50 million, 8 5/8%
subordinated notes and the $7.5 million GB Capital Securities. It is
anticipated that the Company will recognize a loss on the debt retirements. As
of December 31, 1997, this loss is not determinable.

In connection with the financing of the Sumitomo Acquisition, the Company
expects to issue $110 million of subordinated debt. The Company expects to
make a subordinated loan of a comparable amount to the California Subsidiary
upon consummation of the combination of Grossmont Bank, Sumitomo and First
Pacific.

CAPITAL

One of the Company's financial objectives is to consistently produce
superior risk-adjusted returns on its shareholders' capital, and its preferred
method of returning excess capital to its shareholders has been through stock
repurchases augmented with cash dividends. The Company believes that a strong
capital position is vital to continued profitability and to promoting
depositor and investor confidence. The Company's consolidated capital levels
are a result of its capital policy, which establishes guidelines for its
subsidiaries based on industry standards, regulatory requirements and an
attempt at balancing perceived risks with expected returns for various
activities. The Company's goal is to consistently achieve a high return on
shareholders' equity, while at the same time maintaining "risk-based capital"
of not less than the "well-capitalized" threshold, as defined by federal
banking regulators.

During 1997 and 1996, the Company repurchased and retired 3,572,603 and
1,096,992 shares of Common Stock at a cost of $119.7 million and $21.6
million, respectively.

Total shareholders' equity on December 31, 1997 was $656 million, an
increase of 18.2% over $555 million on December 31, 1996. The ratio of average
equity to average assets for the year 1997 was 6.68%, compared to 7.42% for
1996.

On December 31, 1997, the Company's Tier I leverage ratio was 6.75%, as
compared to 8.70% on December 31, 1996. On December 31, 1997, the Company's
Tier I risk-based capital ratio was 11.74%, as compared to 14.16% on December
31, 1996. On December 31, 1997 the Company's total risk-based capital ratio
was 13.75%, as compared to 17.52% on December 31, 1996. The Company's
regulatory capital ratios on December 31 for the years 1997 and 1996 are shown
in the table that follows.

<TABLE>
<CAPTION>
RATIOS
FOR RATIOS TO BE
MINIMUM CONSIDERED
CAPITAL "WELL-
1996 1997 ADEQUACY CAPITALIZED"
------ ------ -------- ------------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C> <C>
Tier I capital........................ $ 628 $ 660
Total capital......................... 777 773
Risk-adjusted assets, net of goodwill
and excess deferred tax assets....... 4,437 5,624
Average assets, net of goodwill and
excess deferred tax assets........... 7,225 9,785
Tier I leverage ratio................. 8.70% 6.75% 3.00% 5.00%
Tier I risk-based capital ratio....... 14.16 11.74 4.00 6.00
Total risk-based capital ratio........ 17.52 13.75 8.00 10.00
</TABLE>

27
<PAGE>

DIVIDENDS

Dividends per share were $0.47 in 1997, an increase of 10.6% over $0.425 in
1996. The Company's quarterly dividend rate was $0.1025 per share for the
first and second quarters of 1996, increasing to $0.11 per share for the third
and fourth quarters of 1996 and the first quarter of 1997 and increasing to
$0.12 per share for the second, third and fourth quarters of 1997.

FOREIGN OPERATIONS

ZFNB opened a foreign office located in Grand Cayman, Grand Cayman Islands,
B.W.I. in 1980. This office has no foreign loans outstanding. The office
accepts Eurodollar deposits from qualified customers of ZFNB and places
deposits with foreign banks and foreign branches of other U.S. banks. Foreign
deposits at December 31 totaled $183 million in 1997 and $114 million in 1996,
and averaged $142 million for 1997 and $121 million for 1996.

RISK ELEMENTS

CREDIT RISK MANAGEMENT

Management of credit risk is essential in maintaining a safe and sound
institution. The Company has structured its organization to separate the
lending function from the credit administration function to strengthen the
control and independent evaluation of credit activities. Loan policies and
procedures provide the Company with a framework for consistent underwriting
and a basis for sound credit decisions. In addition, the Company has well-
defined standards for grading its loan portfolio, and management utilizes a
comprehensive loan grading system to determine risk potential in the
portfolio. A separate internal credit examination department periodically
conducts examinations of the quality, documentation and administration of the
Company's lending departments, and submits reports thereon to a committee of
the Zions Board. Emphasis is placed on early detection of potential problem
credits so that action plans can be developed on a timely basis to mitigate
losses.

Another aspect of the Company's credit risk management strategy is the
diversification of the loan portfolio. At year end, the Company had 4% of its
portfolio in loans held for sale, 25% in commercial loans, 57% in real estate
loans, 9% in consumer loans, 4% in lease financing and 1% in other loans. The
Company's real estate portfolio is also diversified. Of the total portfolio,
10% is in real estate construction loans, 3% is in home equity credit lines,
14% is in 1-4 family residential loans and 30% is in commercial loans secured
by real estate. In addition, the Company attempts to avoid the risk of an
undue concentration of credits in a particular industry or trade group. The
commercial loan and lease portfolio consists of approximately 11 industry
classification groupings. On December 31, 1997, the larger concentrations of
risk in the commercial loan and leasing portfolio were represented by real
estate and construction, business services and transportation, manufacturing,
and retail industry groupings, which comprised approximately 29%, 19%, 9% and
7%, respectively, of the portfolio. The Company has a well-diversified loan
portfolio with no significant exposure to highly leveraged transactions. Most
of the Company's business activity is with customers located within the states
of Utah, Idaho, Nevada, Arizona, Colorado and California and it has no foreign
credits in its loan portfolio. Also, the Company does not have significant
exposure to any individual customer or counterparty.

NONPERFORMING ASSETS

Nonperforming assets include nonaccrual loans, restructured loans and other
real estate owned. Loans are generally placed on nonaccrual status when the
loan is 90 days or more past due as to principal or interest, unless the loan
is in the process of collection and well-secured. Consumer loans are not
placed on a nonaccrual status, inasmuch as they are generally charged off when
they become 120 days past due. Loans are restructured to provide a reduction
or deferral of interest or principal payments when the financial condition of
the borrower deteriorates and requires that the borrower be

28
<PAGE>

given temporary or permanent relief from the original contractual terms of the
credit. Other real estate owned is primarily acquired through or in lieu of
foreclosure on credits secured by real estate.

The Company's nonperforming assets were $16 million on December 31, 1997, up
from $14 million on December 31, 1996. Such nonperforming assets as a
percentage of net loans and leases, other real estate owned and other
nonperforming assets were 0.33% on December 31, 1997, as compared to 0.36% on
December 31, 1996.

Accruing loans past due 90 days or more totaled $10 million on December 31,
1997, up from $4 million on December 31, 1996. These loans equaled 0.20% of
net loans and leases on December 31, 1997, as compared to 0.09% on December
31, 1996.

No loans were considered potential problem loans on December 31, 1997 or
1996. Potential problem loans are defined as loans presently on accrual and
not contractually past due 90 days or more and not restructured, but about
which management has serious doubt as to the future ability of the borrower to
comply with present repayment terms and which may result in the reporting of
the loans as nonperforming assets.

The Company's total recorded investment in impaired loans, in accordance
with Financial Accounting Standard statements and included in nonaccrual loans
and leases, amounted to $7.1 million and $7.8 million on December 31, 1997 and
1996, respectively. The Company considers a loan to be impaired when the
accrual of interest has been discontinued and the loan meets other criteria
under the statements. The amount of the impairment is measured based on the
present value of expected cash flows, the observable market price of the loan
or the fair value of the collateral. Impairment losses are included in the
allowance for loan losses through a provision for loan losses. Included in the
allowance for loan losses on December 31, 1997 and 1996 is a required
allowance of $0.046 million and $0.025 million respectively, on $0.3 million
and $1.0 million, respectively, of the recorded investment in impaired loans.

The following table sets forth the composition of nonperforming assets at
December 31 for the years indicated.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans................................. $ 24 $ 14 $ 11 $ 13 $ 12
Restructured loans............................... 4 1 -- 1 1
Other nonperforming assets....................... 3 4 2 -- 3
---- ---- ---- ---- ----
Total.......................................... $ 31 $ 19 $ 13 $ 14 $ 16
==== ==== ==== ==== ====
Nonperforming assets to net loans* and leases and
nonperforming assets............................ 1.23% 0.79% 0.41% 0.36% 0.33%
Accruing loans past due 90 days or more.......... $ 11 $ 3 $ 5 $ 4 $ 10
Accruing loans past due 90 days or more to net
loans* and leases............................... 0.44% 0.13% 0.17% 0.09% 0.20%
</TABLE>
- --------
*Includes loans held for sale.

ALLOWANCE FOR LOAN LOSSES

The Company's allowance for loan losses was 1.65% of net loans and leases on
December 31, 1997 compared to 2.00% on December 31, 1996. Net charge-offs in
1997 were $8.0 million, or 0.19% of average loans and leases, compared to net
charge-offs of $3.8 million, or 0.11% of average net loans and leases in 1996.

29
<PAGE>

The allowance as a percentage of nonaccrual loans and restructured loans was
638.84% on December 31, 1997, compared to 566.35% on December 31, 1996. The
allowance, as a percentage of nonaccrual loans and accruing loans past due 90
days or more, was 368.32% on December 31, 1997, compared to 472.14% on
December 31, 1996.

On December 31, 1997 and 1996, the allowance for loan losses included
allocations of $8.9 million and $6.2 million, respectively, related to
commitments to extend credit on loans and standby letters of credit.
Commitments to extend credit on loans and standby letters of credit on
December 31, 1997 and 1996 totaled $2,534 million and $2,076 million,
respectively. The Company's actual future credit exposure is much lower than
the contractual amounts of the commitments because a significant portion of
the commitments is expected to expire without being drawn upon.

In analyzing the adequacy of the allowance for loan and lease losses,
management utilizes a comprehensive loan grading system to determine risk
potential in the portfolio, and considers the results of independent internal
and external credit review, historical charge-off experience and changes in
the composition and volume of the portfolio. Other factors, such as general
economic conditions and collateral values, are also considered. Larger problem
credits are individually evaluated to determine appropriate reserve
allocations. Additions to the allowance are based upon the resulting risk
profile of the portfolio developed through the evaluation of the above
factors.

The following table shows the change in the allowance for losses for each
year indicated.

<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER
31,
---------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Loans* and leases (net of unearned
income).............................. $2,486 $2,391 $3,068 $3,837 $4,872
====== ====== ====== ====== ======
Average loans* and leases outstanding
(net of unearned income)............. $2,222 $2,575 $2,663 $3,432 $4,342
====== ====== ====== ====== ======
Allowance for possible losses:
Balance at beginning of year........ $ 59 $ 69 $ 67 $ 73 $ 77
Allowance of companies acquired..... 1 1 6 3 5
Provision charged against earnings.. 3 2 3 5 6
Loans and leases charged off........ (9) (12) (9) (10) (14)
Recoveries.......................... 14 7 6 6 6
------ ------ ------ ------ ------
Net loan and lease (charge-offs)
recoveries......................... 5 (5) (3) (4) (8)
------ ------ ------ ------ ------
Balance at end of year................ $ 68 $ 67 $ 73 $ 77 $ 80
====== ====== ====== ====== ======
Ratio of net charge-offs (recoveries)
to average loans and leases.......... (0.23)% 0.19% 0.10% 0.11% 0.19%
Ratio of allowance for possible losses
to loans and leases.................. 2.75% 2.80% 2.39% 2.00% 1.65%
Ratio of allowance for possible losses
to nonperforming loans............... 250.13% 471.89% 660.17% 566.35% 638.84%
Ratio of allowance for possible losses
to nonaccrual loans and accruing
loans past due 90 days or more....... 200.27% 401.88% 453.76% 472.14% 368.32%
</TABLE>
- --------
*Includes loans held for sale.

30
<PAGE>

LIQUIDITY RISK MANAGEMENT

The Company manages its liquidity to provide adequate funds to meet its
financial obligations, including withdrawals by depositors and debt service
requirements as well as to fund customers' demand for credit. Liquidity is
primarily provided by the regularly scheduled maturities of the Company's
investment and loan portfolios. Management of the maturities of these
portfolios is an important source of medium- to long-term liquidity. The
Company's ability to raise funds in the capital markets through the
securitization process allows it to meet funding needs at a reasonable cost.

To meet the Company's short-term liquidity needs, on December 31, 1997 the
Company had cash, money market investments and liquid securities net of short-
term or "purchased" liabilities and foreign deposits, of $2.0 billion or 32.2%
of core deposits. The Company's core deposits, consisting of demand, savings,
money market and time deposits under $100,000, constituted 91.4% of total
deposits at year-end.

The Company's cash requirements consist primarily of debt service, dividends
to shareholders, operating expenses, income taxes and share repurchases. The
Company's cash needs are routinely met through dividends from subsidiaries,
proportionate shares of current income taxes, management and other fees,
unaffiliated bank lines and debt issuance.

At January 1, 1998, $60.9 million of dividend capacity was available from
subsidiaries to pay to the Company without having to obtain regulatory
approval. During 1997, dividends from subsidiaries were $98.7 million. In
October 1997, the Company issued a $50 million senior note to a third party in
a private transaction. The note matures in October 1999. At December 31, 1997,
the Company had revolving credit facilities with two banks totaling $50
million. On that date, the balance outstanding on these bank lines was $44
million.

MARKET RISK MANAGEMENT

Market risk is the possibility that changes in interest rates or equity
securities prices will impair the fair value of the Company's financial
instruments. The Company has an Asset/Liability Committee which measures and
reviews the market risk of the Company and establishes policies and procedures
to limit its exposure to changes in interest rates. These policies are
reviewed and approved by the boards of directors of the Company and the
Company's subsidiary banks.

Interest rate risk is the most significant market risk regularly undertaken
by the Company. This risk is monitored through the use of three complementary
measurement methods: equity duration, income simulation and gap analysis.
Equity duration is the residual average life of the Company's equity
determined by subtracting the weighted average life of the discounted expected
cash flows of its liabilities from its assets. Income simulation is an
estimate of the net interest income which would be recognized under different
rate environments. Gap analysis compares the amount of assets which mature or
are subject to an interest rate reset during a specified period to the amount
of liabilities with similar rate change characteristics.

At year-end, the equity duration of the Company was estimated to be 1.3
years. A 200 basis point immediate increase in rates was estimated to increase
the duration of equity to 5.2 years. Conversely, an immediate decrease in
rates of similar magnitude was estimated to decrease the duration of equity to
0.2 years. The Company's policy requires that all three of these measures be
between 0 and 7 years.

For income simulation, the Company's policy requires that net interest
income not be expected to decline by more than 10% during one year if rates
rise or fall by 200 basis points during the period. At year-end, net interest
income was expected to decline by 0.23% during 1998 in a rising rate
environment relative to projected net interest income in a stable rate
environment. If rates declined by

31
<PAGE>

200 basis points during 1998, net interest income was forecasted to be 1.25%
lower than if rates were stable. Net interest income was expected to be
modestly lower in either a rising or declining rate scenario for a variety of
factors, including management's assumptions regarding loan and deposit
pricing, security and loan prepayments and changes in relationships between
market rates.

Management exercises its best judgment in making assumptions regarding loan
and security prepayments, early deposit withdrawals and other non-controllable
events in managing the Company's exposure to changes in interest rates. The
interest rate risk position is actively managed and changes daily as the
interest rate environment changes; therefore, positions at the end of any
period may not be reflective of the Company's position in any subsequent
period.

At year end, the one year gap for the Company was negative $312.6 million;
i.e., the $6,024 million of assets that mature or reprice during 1998 was less
than the $5,750 million of liabilities and the $586 million net effect of off-
balance sheet swaps that mature or reprice during the same period. This gap
represented 3.3% of total assets. Details of the repricing characteristics of
the balance sheet as of year-end are presented in the accompanying table. The
Company does not have policy limits regarding its gap position.

32
<PAGE>

MATURITIES AND INTEREST RATE SENSITIVITY
ON DECEMBER 31, 1997

<TABLE>
<CAPTION>
AFTER
THREE AFTER ONE
WITHIN MONTHS YEAR BUT
THREE BUT WITHIN WITHIN AFTER FIVE NOT RATE
MONTHS ONE YEAR FIVE YEARS YEARS SENSITIVE TOTAL
-------- ---------- ---------- ---------- --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
USES OF FUNDS
Earning Assets:
Interest-bearing
deposits............. $ 7.6 $ 19.2 $ 35.0 $ 0.1 -- $ 61.9
Federal funds sold.... 402.9 -- -- -- -- 402.9
Security resell
agreements........... 349.3 -- -- -- -- 349.3
Securities:
Held to maturity..... 843.6 433.3 507.2 358.6 -- 2,142.7
Available for sale... 194.2 50.7 121.2 119.6 -- 485.7
Trading account...... 83.7 -- -- -- -- 83.7
Loans and leases...... 3,033.5 605.6 987.6 245.0 -- 4,871.7
Non-earning assets...... -- -- -- -- $1,123.9 1,123.9
-------- -------- -------- -------- -------- --------
Total uses of
funds............. $4,914.8 $1,108.8 $1,651.0 $ 723.3 $1,123.9 $9,521.8
======== ======== ======== ======== ======== ========
SOURCES OF FUNDS
Interest-bearing
deposits and
liabilities:
Savings and money
market deposits...... $2,100.5 $ 23.7 $ 65.9 $1,288.2 -- $3,478.3
Time deposits under
$100,000............. 273.1 479.6 247.4 1.6 -- 1,001.7
Time deposits over
$100,000............. 148.8 199.2 60.8 -- -- 408.8
Foreign............... 183.0 -- -- -- -- 183.0
Securities sold, not
yet purchased........ 45.1 -- -- -- -- 45.1
Federal funds
purchased............ 294.1 -- -- -- -- 294.1
Security repurchase
agreements........... 976.7 -- -- -- -- 976.7
FHLB advances and
other borrowings:
Less than one year... 59.9 -- -- -- -- 59.9
Over one year........ 36.5 51.8 14.0 108.4 -- 210.7
Long-term debt........ -- 0.1 50.4 208.0 -- 258.5
Noninterest-bearing
deposits............... 877.8 -- -- -- $ 904.9 1,782.7
Other liabilities....... -- -- -- -- 166.8 166.8
Shareholders' equity.... -- -- -- -- 655.5 655.5
-------- -------- -------- -------- -------- --------
Total sources of
funds............. $4,995.5 $ 754.4 $ 438.5 $1,606.2 $1,727.2 $9,521.8
======== ======== ======== ======== ======== ========
Off-balance sheet items
affecting interest rate
sensitivity............ $ (661.3) $ 75.0 $ 578.1 $ 8.2 -- --
Interest rate
sensitivity gap........ (742.0) 429.4 1,790.6 (874.7) $ (603.3) --
Percent of total assets. (7.8)% 4.5% 18.8% (9.2)% (6.3)% --
Cumulative interest rate
sensitivity gap........ $ (742.0) $ (312.6) $1,478.0 $ 603.3 -- --
Cumulative as a % of
total assets........... (7.8)% (3.3)% 15.5% 6.3% -- --
</TABLE>

33
<PAGE>

The Company, through the management of maturities and repricing of its
assets and liabilities and the use of off-balance sheet arrangements,
including interest rate caps, floors, futures, options and exchange
agreements, attempts to manage the effect on net interest income of changes in
interest rates. The prime lending rate is the primary basis used for pricing
the Company's loans and the 91-day Treasury bill rate is the index used for
pricing many of the Company's deposits. The Company, however, is unable to
economically hedge the prime/T-bill spread risk through the use of derivative
financial instruments. For a further discussion and information regarding off-
balance sheet financial contracts, refer to Notes 1, 13 and 19 to the
Financial Statements.

YEAR 2000

A number of electronic systems utilize a two-digit field for year references
(e.g., 98 instead of 1998). Such systems may determine the year 2000, if
represented as "00", to be "98" years ago rather than two years hence. The
Company is in the process of modifying or replacing certain computer software
and hardware and other systems to ensure proper processing of transactions
after 1999. The Company is also in contact with external service providers to
ascertain that their systems, upon which the Company depends, will also be
upgraded, if necessary.

The Company anticipates that all of its major systems for which it conducts
its own processing, including those associated with recently acquired
subsidiaries, will be compliant with Year 2000 processing by the end of 1998.
The Company believes that all of its third-party service providers will also
be compliant by the end of 1998, except for its trust and mortgage processing
systems, which it believes will be compliant by the end of the first quarter
of 1999.

A review is also being undertaken of the Company's other systems to confirm
proper functionality after 1999, including security cameras, alarm systems,
voice mail and elevators, among others. Finally, the Company inquires about
Year 2000 preparedness being undertaken by its customers to which it has
significant credit exposure. The Company estimates that the cumulative
incremental cost it will incur to address the Year 2000 issue is approximately
$3 million. The cost estimate excludes the expense outlays the Company is
making to replace its processing systems in the ordinary course of business to
improve its products and services. Many of these new systems also correct
deficiencies that the Company's present software has in processing
transactions after 1999. The preponderance of this expense will be recognized
in 1998.

34
<PAGE>

BUSINESS

THE COMPANY

Zions, headquartered in Salt Lake City, Utah, is the sixth largest bank
holding company based in the western United States. Zions has grown rapidly
over the last five years through continued penetration of existing markets and
through the acquisition of profitable community banks in high economic growth
markets. As of March 31, 1998, Zions had total assets of $10.6 billion, total
deposits of $7.8 billion and total shareholders' equity of $724 million.
Through its banking subsidiaries Zions operated 253 branches in the states of
Arizona, California, Colorado, Idaho, Nevada, New Mexico and Utah as of March
31, 1998.

The Company's community banks differentiate themselves from the competition
by providing a high level of service and responsiveness to customers, while
offering the broader product array and more efficient cost structure usually
associated with a much larger bank. The Company's banks operate with strong
local management, substantial local decision-making authority and, in general,
a localized brand identity. While executing its strategy to aggressively grow
its operations in its current markets and to opportunistically expand into
high economic growth regions, the Company has begun to centralize back-office
and staff functions for all of its subsidiary banks to improve operating
efficiency and reduce administrative burden. The Company supplements its core
community banking business by providing specialized financial services.

The Company grew substantially in 1997 expanding its geographic scope of its
operations, while at the same time achieving record financial performance. In
1997, net income increased to $122.4 million, or $1.89 per diluted share,
representing increases of 13.9% and 12.5%, respectively, over the amounts for
1996. In addition, operating cash earnings per common share increased to $2.01
for 1997, an increase of 16.9% over the $1.72 for 1996. Finally, the Company's
return on average shareholders' equity and operating cash return on average
shareholders' equity were 19.88% and 25.34%, respectively, for 1997, compared
to 20.95% and 23.26%, respectively, for 1996.

RECENT DEVELOPMENTS; SUMITOMO ACQUISITION

On March 25, 1998, the Company announced that it had entered into a
definitive agreement to acquire Sumitomo. In addition to significantly
expanding the Company's California banking operations and distribution
network, the Sumitomo Acquisition will represent Zions' first entry into the
Los Angeles and San Francisco markets. The Company intends to combine Sumitomo
with its California subsidiaries, Grossmont Bank and First Pacific, upon
consummation of the Sumitomo Acquisition. Such combination will result in the
fifth largest commercial bank in California, with 71 branches and assets of
over $6 billion, and will be managed by Robert G. Sarver, the chairman of
Grossmont Bank and a director of Zions. Subject to regulatory and shareholder
approval, the Sumitomo Acquisition is expected to close in the third quarter
of 1998.

In order to provide an appropriate incentive to Mr. Sarver to expand the
Company's California banking operations and distribution network, Zions
intends to enter into an agreement with Mr. Sarver pursuant to which Mr.
Sarver will serve as the chief executive officer of the California Subsidiary
to be created from the combination of Grossmont Bank, Sumitomo and First
Pacific. Moreover, pursuant to such proposed agreement, Zions will sell to Mr.
Sarver, individually, and to a limited partnership of which Mr. Sarver is the
general partner, approximately 5% of the equity interest in the California
Subsidiary for its cost basis, or approximately $32 million. The limited
partners of the limited

35
<PAGE>

partnership include, among others, individuals who are currently senior
officers of Grossmont Bank and who will be senior officers of the California
Subsidiary.

Pursuant to such proposed agreement, Zions will also finance a portion of
the investment being made by Mr. Sarver. Zions will lend to Mr. Sarver
approximately $14.5 million, which loan will be non-recourse to Mr. Sarver and
will be secured by the 2.5% equity interest in the California Subsidiary held
by Mr. Sarver and by 200,000 shares of Common Stock owned by Mr. Sarver. Such
loan will bear interest at 200 basis points over the five-year U.S. treasury
rate, compound annually and be payable at maturity in 2003. At such time, for
a period of 90 days, Mr. Sarver and the limited partnership will have the
right to put to Zions their equity interest in the California Subsidiary at a
price to be determined by Mr. Sarver and Zions at such time. See Notes to
Unaudited Pro Forma Condensed Combined Financial Information.

Zions believes that the above-mentioned transaction will benefit the Company
by providing a direct incentive to Mr. Sarver and other employees of the
California Subsidiary to aggressively grow the California franchise. Zions
also believes that the above-mentioned transaction will be based on terms as
fair to the Company as those which would have been available in arm's-length
negotiations.

Two shareholders of Sumitomo have filed lawsuits, each seeking to enjoin the
Sumitomo Acquisition. Counsel representing Sumitomo has advised the Company
that it believes that such lawsuits are without merit. The Sumitomo Bank,
Limited has agreed to indemnify the Company and the California Subsidiary in
connection with certain matters, including any losses in connection with such
litigation.

In addition, the Company has recently acquired three bank holding companies.
On May 22, 1998, Zions consummated the acquisition of FP in Escondido,
California. In addition, on June 1, 1998, the Company consummated the SBT
Merger and the Routt Merger. The Company has also recently entered into
several other definitive merger agreements. On May 8, 1998, the Company
announced that it had entered into a definitive agreement with Kersey pursuant
to which Kersey will be merged with and into the Company and on May 15, 1998,
the Company announced that it had entered into a definitive agreement with
Mountain pursuant to which Mountain will be merged with and into the Company.
At March 31, 1998, SBT, Routt and Kersey had assets of $97 million, $102
million and $145 million, respectively, and operated two, two and seven
branches in the state of Colorado, respectively, and at December 31, 1997,
Mountain had assets of $85 million and operated two branches in Colorado.
Subject to regulatory and shareholder approval, the Kersey Merger and the
Mountain Merger are expected to close in the third quarter of 1998. Finally,
on May 14, 1998, the Company announced that it had entered into a definitive
agreement with Commerce pursuant to which Commerce will be merged with and
into the Company. The Commerce Merger, which, subject to regulatory and
shareholder approval, is expected to close in the third quarter of 1998, will
represent Zions' first entry into the state of Washington and the Seattle
market. At March 31, 1998, Commerce had assets of $330 million and operated
one branch in Seattle.

BUSINESS STRATEGY

The Company's community banks differentiate themselves from the competition
by providing a high level of customer service and responsiveness to customers,
while at the same time offering the broader product array and more efficient
cost structure usually associated with a much larger bank. The Company has
used this strategy to aggressively grow in its current markets and to
opportunistically expand into high economic growth markets. The Company's
banks operate with strong local management, substantial local decision-making
authority and, in general, a localized brand identity. While executing its
strategy to aggressively grow its operations in its current markets and to
opportunistically expand into high economic growth regions, the Company has
begun to centralize back-office and staff functions for all of its subsidiary
banks to improve operating efficiency and reduce

36
<PAGE>

administrative burden. In addition, the Company has centralized risk
management and the approval of credit policy to achieve further efficiencies
and to appropriately manage risk.

The Company has opportunistically expanded its banking market into
contiguous high-growth areas in the western United States through mergers and
acquisitions, which have been immediately accretive to earnings. The Company
has found that many community banks consider its strategy and management style
attractive and, consequently, consider Zions to be a business partner of
choice.

The Company enhances its core community banking strategy and improves
shareholder returns generated from the provision of traditional banking
services in its targeted high growth markets through specialized financial
services which it believes have attractive growth prospects nationwide,
including the following:

. Small Business Administration lending programs. As a designated
"preferred lender", the Company originates SBA loans in 31 of the 65
markets identified by the SBA nationwide. In the aggregate, the Company
was one of the largest 504 program lenders and the eighth largest 7(a)
program lender in the United States in 1997.

. Financial services for municipalities. The Company provides a variety of
services for municipalities, including credit, cash management and
financial advisory services. In part as a result of its acquisitions of
Howarth & Associates in Las Vegas and Kelling, Northcross, & Nobriega in
Oakland, the Company is the eighth largest municipal financial advisor
as measured by the number of deals in the nation. In December 1997, a
subsidiary of ZFNB became the first subsidiary of a bank authorized to
underwrite municipal revenue bonds in the United States. The subsidiary
underwrote its first revenue bond in April 1998.

. Secure legal and financial transactions over the Internet. Digital
Signature Trust Company ("DST"), provides digital certificate authority
and repository functions that facilitate electronic transactions by
enabling the authentication of digital signatures. ZNFB received
approval from the Office of the Comptroller of the Currency ("OCC") to
establish and operate DST as a subsidiary, subject to certain
conditions, in January 1998. DST was the first and, to the knowledge of
ZNFB, is still the only company of its kind to have received approval to
conduct its business as a bank operating subsidiary.

. Farmer Mac products and services. The Company is a large shareholder of,
and one of two primary servicers for, Farmer Mac. The Company believes
that as a government-sponsored enterprise with expanded powers granted
by Congress in 1996, Farmer Mac is well-positioned to underwrite a
significantly larger portion of agricultural property than it has in
previous years.

OPERATIONS

THE BANKING SUBSIDIARIES

The Company's banks provide a wide variety of commercial and retail banking
and mortgage-lending financial services. Commercial loans, lease financing,
cash management, lockbox, customized draft processing, and other special
financial services are provided for business and other commercial banking
customers. A wide range of personal banking services are provided to
individuals, including bankcard, student and other installment loans and home
equity lines of credit, checking accounts, savings accounts, time certificates
of various types and maturities, trust services and safe deposit facilities.
In addition, direct deposit of payroll, social security and various other
government checks are

37
<PAGE>

offered. Automated teller machines provide 24-hour access and availability to
customers' accounts and to many consumer banking services through statewide,
regional, and nationwide ATM networks. Customer transactions are processed
through the Company's ATMs, point-of-sale terminals, and ATMs operated by
other financial institutions.

The following table sets forth, as of March 31, 1998, and with respect to
each state in which the Company operates banking subsidiaries, the total
number of traditional branches, the total number of grocery store banking
centers, the total number of branches (including the number of grocery store
banking centers) and the amount of deposits:
<TABLE>
<CAPTION>
GROCERY
STORE
TRADITIONAL BANKING TOTAL
STATE BRANCHES CENTERS BRANCHES DEPOSITS
----- ----------- ------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Utah.............................. 77 39 116 $ 3,732
Nevada............................ 21 19 40 852
Arizona........................... 31 -- 31 1,205
Idaho............................. 14 2 16 *
Colorado.......................... 32 2 34 1,158
California........................ 15 -- 15 852
New Mexico........................ 1 -- 1 *
</TABLE>
- --------
* Amounts included with ZFNB (Utah) and Colorado banks, respectively.

ZFNB in Utah has developed special packages of financial services designed
to meet the financial needs of particular market niches. ZFNB has also
established a Private Banking group to service the financial needs of wealthy
individuals; an Executive Banking program to service the needs of corporate
executives of commercial clients, and an Affinity program which offers
discounted financial services to employees of commercial accounts on a group
basis. ZFNB has also developed a series of products geared to the lower-income
customer, including the Flex Loan (a low-income personal loan), and several
low-income housing programs.

ZFNB offers an electronic bill paying service activated through a touch tone
telephone. Home banking products are available on the VISA(R) platform, using
Quicken(R), Microsoft Money(R) and Macintosh(R) personal financial management
software programs, and over the Internet, which allows retail customers to use
home computers to access and transfer account balances, pay bills and maintain
and reconcile accounts. Zions Bank also electronically delivers benefits for
the state of Utah through the use of an electronic card system "Utah Horizon
EBT" at statewide merchant locations. "Reddi-Banker", an interactive video
banking platform, allows customers to obtain product information, open deposit
accounts, obtain loans, buy insurance and purchase investment products.

ZFNB is one of 37 U.S. Government Securities dealers designated as a primary
dealer by the Federal Reserve Bank of New York. Zions is also a major
underwriter and distributor of municipal securities, federal agency securities
and specialized securities such as the government-guaranteed portions of SBA
loans. Zions' Capital Markets group provides executable quotes on odd-lot
government and agency securities via Bloomberg and the Internet. Zions also
provides financial advisory services to municipalities and other public
entities.

Through Zions Small Business Finance division, ZFNB provides SBA 7(a) loans
to small businesses throughout the United States. ZFNB's SBA 504 department
works with Certified Development Companies and correspondent banks throughout
the country, providing the nation's largest source of secondary market
financing for this loan program. Zions Agricultural Finance, a new division,
specializes in originating, underwriting, and servicing long-term farm and
ranch loans.

38
<PAGE>

ZFNB provides correspondent banking services such as cash letter processing,
wire services, federal funds facilities and loan participations. ZFNB's
International Banking Department issues letters of credit and handles foreign
exchange transactions for customers, but it does not take a trading position
in foreign exchange. ZFNB's Grand Cayman branch accepts Eurodollar deposits
from qualified customers. Zions' banking subsidiaries, however, do not engage
in any foreign lending.

ZFNB, Nevada State Bank and National Bank of Arizona have established trust
divisions. Clients in Utah, Nevada, Arizona and Colorado are offered a variety
of fiduciary services ranging from the administration of estates and trusts to
the management of funds held under pension and profit sharing plans. They also
offer custodian, portfolio, and management services. The trust division of
ZFNB also acts as fiscal and payment agent, transfer agent, registrar and
trustee under corporate and trust indentures for corporations, governmental
bodies and public authorities.

OTHER SUBSIDIARIES

The Company conducts various other bank-related business activities through
subsidiaries owned by ZFNB and subsidiaries of the Company. Zions Mortgage
Company, a subsidiary of ZFNB, conducts a mortgage banking operation in Utah,
Nevada and Arizona. Zions Credit Corporation, a subsidiary of ZFNB, engages in
lease origination and servicing operations primarily in Utah, Nevada, and
Arizona. Zions Investment Securities, Inc. also a subsidiary of ZFNB, provides
discount investment brokerage services on a nonadvisory basis to both
commercial and consumer customers and recently won approval from the OCC to
conduct municipal revenue bond underwriting activities. Personal investment
officers employed by the discount brokerage subsidiary in many larger branch
offices provide customers with a wide range of investment products, including
municipal bonds, mutual funds and tax-deferred annuities. ZFNB's small
business investment corporation, Wasatch Venture Corporation, provides early-
stage capital, primarily for technology companies located in the West.

Zions Life Insurance Company underwrites, as reinsurer, credit-related life
and disability insurance. Zions Insurance Agency, Inc. operates an insurance
brokerage business which administers various credit-related insurance programs
in the Company's subsidiaries and sells general lines of insurance. The
Company's insurance subsidiaries offer customers a full range of insurance
products through licensed agents. The products include credit life products,
collateral protection products, life policies, homeowners policies, property
and casualty policies, and commercial business owner type policies. Cash
Access, Inc. provides an ATM network for cash dispensing ATMs to be installed
in convenience stores, service stations, hotels and other businesses. Zions
Data Service Company provides data processing services to all subsidiaries of
the Company.

SUPERVISION AND REGULATION

Bank holding companies and banks are extensively regulated under both
federal and state law. The information contained in this section summarizes
portions of the applicable laws and regulations relating to the supervision
and regulation of the Company 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. Any change in applicable
law or regulation may have a material effect on the business and prospects of
the Company and its subsidiaries.

BANK HOLDING COMPANY REGULATION

The Company 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, activities of the Company, 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

39
<PAGE>

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 the 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 the Company, are required to file with the
Federal Reserve Board certain reports and information and are required to
obtain prior approval of the Board to engage in a 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 (the "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 which are mentioned under "--
Interstate Banking" below. 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.

The Federal Reserve Board has authorized the acquisition and control by bank
holding companies of savings and loan associations and certain other savings
institutions without regard to geographic restrictions applicable to
acquisition of shares of a bank.

The Federal Reserve Board is authorized to adopt regulations affecting
various aspects of the operation of bank holding companies. Pursuant to the
general supervisory authority of the BHCA 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 I Capital and Total Capital. Tier I 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 I Capital plus qualifying mandatory convertible debt,
perpetual debt, certain hybrid capital instruments, certain preferred stock
not qualifying as Tier I 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 I 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-weighted 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

40
<PAGE>

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 I Capital. At March 31, 1998, the Company's Tier I and Total
Capital ratios were 11.73% and 13.62%, respectively.

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% 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,
the Company and its bank subsidiaries are not required to include a risk-based
capital charge for its market risk.

MINIMUM LEVERAGE RATIO. The Federal Reserve Board has adopted capital
standards and leverage capital guidelines that include a minimum leverage
ratio of 3% Tier I Capital to adjusted average total assets (the "leverage
ratio"). The leverage ratio is used in tandem with a risk-based ratio of 8%
that took effect at the end of 1992.

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. At March 31, 1998, the
Company's Tier I leverage ratio was 6.89%.

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 OCC, the Federal Deposit Insurance Corporation
("FDIC") and the Federal Reserve Board have issued regulations establishing
the capital requirements for banks under federal law. The regulations, which
apply to the Company's banking subsidiaries, establish minimum risk-based and
leverage ratios which are substantially similar to those applicable to the
Company. As of March 31, 1998, the risk-based and leverage ratios of each of
the Company's 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 established five
capital tiers: "well capitalized", "adequately capitalized",
"undercapitalized", "significantly

41
<PAGE>

undercapitalized" and "critically undercapitalized". Implementing regulations
adopted by the federal banking agencies define the 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

The depository institution subsidiaries are supervised and regularly
examined by various federal and state regulatory agencies. Deposits, reserves,
investments, loans, consumer law compliance, issuance of securities, payment
of dividends, mergers and consolidations, electronic funds transfers,
management practices and other aspects of operations are subject to
regulation. In addition, numerous federal, state and local regulations set
forth specific restrictions and procedural requirements with respect to the
extension of credit, credit practices, the disclosure of credit terms, and
discrimination in credit transactions. The various regulatory agencies, as an
integral part of their examination process, periodically review the banking
subsidiaries' allowances for loan losses. Such agencies may require the
depository institution subsidiaries to recognize additions to such allowances
based on their judgments using information available to them at the time of
their examinations.

42
<PAGE>

Pursuant to FDICIA, the federal banking agencies have adopted regulations or
guidelines prescribing standards for safety and soundness of insured banks and
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 Community Reinvestment Act ("CRA") requires banks to help serve the
credit needs in their communities, including credit to low and moderate income
individuals and geographies. Should the Company or its subsidiaries fail to
adequately serve the community, there are penalties which might be imposed.
Corporate applications to expand branches, relocate, add subsidiaries and
affiliates, and merge with or purchase other financial institutions could be
denied. Community groups are encouraged through the regulation to protest
applications for any bank subject to this regulation if they feel that the
bank is not serving the credit needs of the community in which it serves. The
Company and its subsidiaries have been deemed by regulators in the past to be
adequately serving its communities.

There are many other regulations requiring detailed compliance procedures
which increase costs and require additional time commitments of employees.
Regulators and the Congress continue to put in place rules and laws to protect
consumers, which have a cumulative additional impact on the cost of doing
business. At this point, management cannot completely assess how much earnings
might be affected from these consumer laws.

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 Company or its subsidiaries.

43
<PAGE>

In addition, cases are pending before federal and state courts that seek to
expand or restrict interpretations of existing law and regulation affecting
bank holding companies and their subsidiaries. It is not possible to predict
the extent to which the Company and its subsidiaries may be affected by any of
these initiatives.

DEPOSIT INSURANCE ASSESSMENTS

The insured bank subsidiaries of the Company are required to make quarterly
deposit insurance assessment payments to the Bank Insurance Fund ("BIF"), and
most savings associations to the Savings Associations Insurance Fund ("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 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, 1998, both BIF- and SAIF-assessable deposits will be subject
to an assessment schedule providing for an assessment range of 0% to 0.27%
(with intermediate rates of 0.03%, 0.10%, 0.17% and 0.24%, 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 1998 have been set at
1.256 basis points annually for Quarter 1 and 1.244 for Quarter 2 for BIF-
assessable deposits, and 6.28 and 6.22 basis points annually, respectively,
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.

44
<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. Since
June 1, 1997, and earlier if permitted by applicable state law, an insured
bank has been authorized to 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 unless its home state or the home state of the
out-of-state bank had adopted qualifying legislation barring this form of
interstate expansion by June 1, 1997.

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, existence of state laws that condition acquisitions
on institutions making assets available to a "state-sponsored housing entity",
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 BHCA.

Bank holding companies whose home state is Utah are authorized under Utah
law to acquire control of depository institutions located in other states. The
laws of Arizona, California and in certain instances Nevada permit the
acquisition of banks headquartered in those states by out-of-state bank
holding companies irrespective of the age of the institution to be acquired,
upon receipt of state regulatory approval, and the laws of Colorado, Idaho and
in certain instances Nevada permit the acquisition of banks located in those
states by bank holding companies only if the institution to be acquired has
been in continuous operation as a bank for at least five years prior to the
acquisition, upon receipt of state regulatory approval. These jurisdictions
also authorize certain banks headquartered within their borders to engage in
interstate merger transactions either as resulting or disappearing
institution.

GOVERNMENT MONETARY POLICIES AND ECONOMIC CONTROLS

The earnings and business of the Company are affected by general economic
conditions. In addition, fiscal or other policies that are adopted by various
governmental authorities can have important consequences on the financial
performance of the Company. The Company is particularly affected by the
policies of the Federal Reserve Board which regulate the national supply of
bank credit. The instruments of monetary policy available to the Federal
Reserve Board include open-market

45
<PAGE>

operations in United States government securities; manipulation of the
discount rates of member bank borrowings; imposing or changing reserve
requirements against member bank deposits; and imposing or changing reserve
requirements against certain borrowings by banks and their affiliates. These
methods are used in varying combinations to influence the overall growth of
bank loans, investments and deposits, and the interest rates charged on loans
or paid for deposits.

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

COMPETITION

The Company and its subsidiaries operate in a highly competitive
environment. The banking subsidiaries compete with other banks, thrift
institutions, credit unions, and money market and other mutual funds for
deposits and other sources of funds. In addition, the Company and its bank and
nonbank subsidiaries face increased competition with respect to the diverse
financial services and products they offer. Competitors include not only other
banks, thrift institutions, and mutual funds, but also insurance companies,
leasing companies, finance companies, brokerage firms, investment banking
companies, and a variety of other financial services and advisory companies.
Many of these competitors are not subject to the same regulatory restrictions
and regulation- or supervision-derived costs as are bank holding companies and
banks such as the Company and its banking subsidiaries.

The Company expects that competitive conditions will continue to intensify
as a result of technological advances. Technological advances have, for
example, made it possible for nondepository institutions to offer customers
automatic transfer systems and other automated-payment systems services that
have been traditional banking products.

EMPLOYEES

The Company had 4,935 full-time equivalent employees at March 31, 1998,
compared to 3,749 at March 31, 1997. The Company's banking subsidiaries had
4,703 full-time equivalent employees at March 31, 1998. The Company believes
that it enjoys good employee relations. In addition to competitive salaries
and wages, the Company and its subsidiaries contribute to group medical plans,
group insurance plans, pension, stock ownership and profit sharing plans.

LEGAL PROCEEDINGS

The Company is the defendant in various legal proceedings arising in the
normal course of business. The Company does not believe that the outcome of
any of such proceedings will have a material adverse effect on its
consolidated financial position, operations or liquidity.

46
<PAGE>

MANAGEMENT

DIRECTORS

Set forth below is certain information concerning the directors of the
Company, including information with respect to their business experience
during the past five years. The Zions Board currently consists of 10
directors. Directors are elected by a plurality of the votes cast at the
annual meeting of the shareholders, and serve for staggered three year terms
and until their successors are elected and qualified.

<TABLE>
<CAPTION>
DIRECTORS AGE POSITION
--------- --- --------
<S> <C> <C>
Roy W. Simmons........... 82 Chairman
Harris H. Simmons........ 43 President, Chief Executive Officer and Director
Jerry C. Atkin........... 49 Director
Grant R. Caldwell........ 73 Director
R.D. Cash................ 55 Director
Richard H. Madsen........ 59 Director
Roger B. Porter.......... 51 Director
Robert G. Sarver......... 36 Director
L.E. Simmons............. 51 Director
I.J. Wagner.............. 82 Director
</TABLE>

Roy W. Simmons is the Chairman of the Company and has been an officer of the
Company since 1961. He is currently a member of the Board of Directors of
ZFNB, and was the Chairman of ZFNB prior to January 1998. Mr. Roy W. Simmons
is the father of Mr. Harris H. Simmons, the President and Chief Executive
Officer of the Company, and L.E. Simmons, a member of the Zions Board.

Harris H. Simmons is the President and Chief Executive Officer of the
Company. Prior to January 1998, Mr. Harris H. Simmons was President and Chief
Executive Officer of ZFNB. He currently serves as Chairman of ZFNB. In
addition, from 1992 to present, he has served as a member of the Board of
Directors of Questar Corporation ("Questar"), an integrated energy services
holding company. His father, Mr. Roy W. Simmons, is the Chairman of the Zions
Board, and his brother, L.E. Simmons, is a member of the Zions Board.

Jerry C. Atkin has been a member of the Zions Board since 1993 and currently
serves on the Executive Compensation Committee of the Zions Board. Mr. Atkin
is the President and Chief Executive Officer of SkyWest Airlines headquartered
in St. George, Utah. He also serves as a director to SkyWest, Inc.

Grant R. Caldwell has been a member of the Zions Board since 1993 and is a
member of the Executive Committee of the Zions Board. Prior to 1987, Mr.
Caldwell was a partner at KMG Main Hurdman, in Salt Lake City, Utah, and has
since retired.

R.D. Cash has served as a member of the Zions Board for 10 years, and is a
member of the Audit Committee of the Zions Board. He is the President and
Chief Executive Officer of Questar, and serves as a director for ZFNB, Energen
Corporation, and Associated Electric and Gas Insurance Services Limited. Mr.
Cash is also a director of the Federal Reserve Bank (Salt Lake City Branch) in
San Francisco, California.

Richard M. Madsen is in his second term as a member of the Zions Board. He
currently serves on the Audit and Executive Compensation Committees of the
Zions Board. He is the Chairman, President and Chief Executive Officer of
ZCMI, which is a retail department store company.

47
<PAGE>

Roger B. Porter has served as a member of the Zions Board since 1993. Mr.
Porter serves on the Audit and Executive Compensation Committees of the Zions
Board. Mr. Porter is an IBM Professor of Business and Government at Harvard
University. During the years 1989 to 1993, Mr. Porter was Assistant to the
President for Domestic and Economic Affairs at The White House. He currently
serves as a director in two other corporations, RightCHOICE Managed Care Inc.,
a major provider of managed health care benefits in Missouri, and Tenneco,
Inc., which is a global manufacturing company with operations in automotive
parts and in packaging.

Robert G. Sarver has been a member of the Zions Board since 1994. He is a
member of the Credit Review/Compliance Committee of the Zions Board. Mr.
Sarver is the Chairman of Grossmont Bank and an Executive Director for
Southwest Value Partners and Affiliates. In addition, he serves as a director
for Monterey Homes Corporation. From 1992 to 1994, Mr. Sarver was the
President of National Bank of Arizona.

L.E. Simmons has been a member of the Zions Board since 1978 and currently
serves on the Credit Review/Compliance Committee of the Zions Board. Mr. L.E.
Simmons is the President of SCF Investment Partners, a private equity
investment management partnership in Houston, Texas. He is also the Chairman
of Tuboscope, Inc., which is a supplier of technical services and highly
engineered products to the oil and gas drilling, completion, production and
transmission industries worldwide. He also serves as a member of the Board of
Directors of CE Franklin, Ltd., which is in the oil field distribution
business. His father, Mr. Roy W. Simmons, is the Chairman of the Zions Board,
and his brother, Harris H. Simmons, is the President and Chief Executive
Officer and a director of the Company.

I.J. Wagner holds the longest term as a member of the Zions Board besides
Mr. Roy W. Simmons. He has been re-elected eleven times, serving a grand total
of 33 years. Mr. Wagner sits on the Audit and Executive Committees of the
Zions Board. In addition, he is President of The Keystone Company, a corporate
investment firm located in Salt Lake City, Utah.

EXECUTIVE OFFICERS

Set forth below is certain information concerning the executive officers of
the Company, including information with respect to their business experience
during the past five years.

<TABLE>
<CAPTION>
OFFICERS AGE POSITION
-------- --- --------
<S> <C> <C>
Roy W. Simmons.......... 82 Chairman
Harris H. Simmons....... 43 President, Chief Executive Officer and Director
A. Scott Anderson....... 51 Executive Vice President, President of ZFNB
Danne L. Buchanan....... 40 Executive Vice President, President
of Zions Data Services Company
Gerald J. Dent.......... 56 Executive Vice President
Dale M. Gibbons......... 37 Executive Vice President, Chief Financial Officer
and Secretary
John J. Gisi............ 52 Senior Vice President, Chairman and
Chief Executive Officer of National Bank of Arizona.
W. David Hemingway...... 50 Executive Vice President
Clark B. Hinckley....... 50 Senior Vice President
George B. Hofmann III... 48 Senior Vice President, President and
Chief Executive Officer of Nevada State Bank.
Gary S. Judd............ 57 Senior Vice President, President and
Chief Executive Officer of Colorado banking operations.
</TABLE>

48
<PAGE>

A. Scott Anderson was elected an Executive Vice President of the Company in
1997. In January 1998, he assumed the position of President and Chief
Executive Officer of ZFNB. From 1990 to 1997, he was an Executive Vice
President of ZFNB.

Danne L. Buchanan has been an Executive Vice President of the Company since
January 1998. Before January of this year, he held the position of Senior Vice
President of the Company. Since March 1995, he has served as the President of
Zions Data Services Company, a wholly-owned subsidiary of the Company. Prior
to March 1995, Mr. Buchanan served as the Senior Vice President and General
Manager of Zions Data Services Company.

Gerald J. Dent was appointed to the position of Executive Vice President of
the Company in January 1998. Prior to that date, he was a Senior Vice
President of the Company for 11 years. Mr. Dent serves as an Executive Vice
President of ZFNB as well.

Dale M. Gibbons holds the positions of Executive Vice President, Chief
Financial Officer and Secretary of the Company. From 1996 to January 1998, he
was a Senior Vice President of the Company. In addition to his positions with
the Company, he is the Secretary and an Executive Vice President of ZFNB.
Prior to joining the Company in August 1996, Mr. Gibbons was a Senior Vice
President for First Interstate Bancorp.

John J. Gisi is a Senior Vice President of the Company, a position in which
he has served since 1994. In addition, he is Chairman and Chief Executive
Officer of National Bank of Arizona.

W. David Hemingway is an Executive Vice President of the Company. Mr.
Hemingway has been an officer of ZFNB since 1977, and currently serves as
Executive Vice President of ZFNB. Further, Mr. Hemingway is a director of the
Federal Agricultural Mortgage Corporation and of Zions Investment Securities,
Inc., a wholly-owned subsidiary of the Company.

Clark B. Hinckley has held the position of Senior Vice President of the
Company since 1994, and currently is in charge of the Company's human
resources department. Prior to March 1994, he served as President of Zions
First National Bank of Arizona.

George B. Hofmann III is a Senior Vice President of the Company. He has
served in this position since 1995. Mr. Hoffman also serves as the President
and Chief Executive Officer of Nevada State Bank. Prior to April 1995, Mr.
Hofmann was a Senior Vice President of ZFNB.

Gary S. Judd was elected a Senior Vice President of the Company in 1998, and
is also the President and Chief Executive Officer of the Company's Colorado
banking operations.

49
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of February 27, 1998 by (i) each person who is
known by the Company to own beneficially 5% or more of the Common Stock, (ii)
each director of the Company and (iii) all directors and officers of the Company
as a group.

<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY COMMON STOCK
NAME OWNED OUTSTANDING
- ---- ------------ -------------
<S> <C> <C>
Zions First National Bank(1)......................... 4,581,741 6.60%
Roy W. Simmons(2)(5)................................. 4,271,191 6.18
Jerry C. Atkin....................................... 9,800 *
Grant R. Caldwell.................................... 7,000 *
R.D. Cash(5)......................................... 27,000 *
Richard H. Madsen.................................... 197,622 *
Roger B. Porter(5)................................... 3,000 *
Robert G. Sarver(5).................................. 818,124 1.18
Harris H. Simmons(3)(5).............................. 2,498,662 3.62
L.E. Simmons(4)(5)................................... 2,296,229 3.33
I.J. Wagner(5)....................................... 285,000 *
All directors and officers as a group (31 persons)... 7,945,288 11.44
</TABLE>
- --------
* Less than 2% of the outstanding shares of Common Stock.

(1) Consists of shares held as of February 27, 1998 by ZFNB in its capacity as
fiduciary for various trust and advisory accounts. Of the shares shown,
ZFNB has sole voting power with respect to a total of 3,296,197 shares
(4.7% of the outstanding shares of Common Stock) 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. ZFNB also acts as trustee for the Zions
Bancorporation Dividend Reinvestment Plan, which holds 1,007,804 shares
(1.4% of the outstanding shares of Common Stock) and the Zions
Bancorporation PAYSOP Plan, which holds 277,740 shares (0.4% of the
outstanding shares of Common Stock) as to which ZFNB does not have or share
voting power.

(2) Consists of 2,279,815 shares held by Mr. Roy Simmons and 1,991,376 shares
held by Simmons Media Group, Inc. ("SMG"), of which Mr. Roy Simmons is a
director and shareholder. Mr. Roy Simmons disclaims beneficial ownership of
shares held by SMG to the extent interests in SMG are held by persons other
than Mr. Roy Simmons.

(3) Consists of 507,286 shares held by Mr. Harris Simmons and 1,991,376 shares
held by SMG, of which Mr. Harris Simmons is a director and shareholder.
Mr. Harris Simmons disclaims beneficial ownership of shares held by SMG to
the extent interests in SMG are held by persons other than Mr. Harris
Simmons. In addition, Mr. Harris Simmons holds an option to acquire from
SMG 186,792 shares of Common Stock, which option is currently exercisable.

(4) Consists of 304,853 shares held by Mr. L.E. Simmons and 1,991,376 shares
held by SMG, of which Mr. L.E. Simmons is a director and shareholder. Mr.
L.E. Simmons disclaims beneficial ownership of shares held by SMG to the
extent interests in SMG are held by persons other than Mr. L.E. Simmons.

(5) Excludes shares of phantom stock issued pursuant to the Company's Deferred
Compensation Plan for Directors. The amount of phantom stock held as of
December 31, 1997 was as follows: Mr. Roy Simmons, 20,137 shares; Mr. Cash,
24,134 shares; Mr. Porter, 8,313 shares; Mr. Sarver, 3,545 shares; Mr. L.E.
Simmons, 5,193 shares; and Mr. Wagner, 2,891 shares.

50
<PAGE>

DESCRIPTION OF CAPITAL STOCK

CAPITAL STOCK

The authorized capital stock of the Company consists of 200,000,000 shares
of Common Stock, no par value per share, and 3,000,000 shares of preferred
stock, no par value per share (the "Preferred Stock"). As of March 31, 1998,
there were 69,075,665 shares of Common Stock and no shares of Preferred Stock
issued and outstanding and the Company had approximately 5,500 holders of
record of its Common Stock.

The authorized shares of Preferred Stock are issuable in one or more series
on the terms set by resolution or resolutions of the Zions Board providing for
the issuance thereof. Each series of Preferred Stock may 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 Zions Board 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 the Company belong exclusively to the holders of
Common Stock.

VOTING RIGHTS

GENERAL

The holders of Common Stock are generally entitled to one vote for each
share held of record on all matters submitted to a shareholder vote. The
holders of Common Stock do not have cumulative voting rights.

SPECIAL VOTES FOR CERTAIN TRANSACTIONS

The Company's Restated Articles of Incorporation (the "Articles") contain
provisions requiring special shareholder votes to approve certain types of
transactions. In the absence of these provisions, under Utah corporate law
either the transactions would require approval by a majority of the shares
voted at a meeting or no shareholder vote would be required.

The Articles require that certain "business transactions" between the
Company 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 the Company. A "related person" means, in general,
a person, corporation, partnership or group acting in concert that
beneficially owns 10% or more of the voting power of the Company's outstanding
voting stock.

The business transactions with a related person subject to such special vote
requirements include (1) a merger or consolidation involving the Company or a
subsidiary of the Company with a related person; (2) the sale, lease,
exchange, transfer or other disposition of all or any substantial part of the
assets of either the Company or a subsidiary of the Company to, with or for
the benefit of a related person; (3) the issuance, sale, exchange or other
disposition by the Company or a subsidiary of the Company to a related person
of securities of the Company or a subsidiary of the Company having an
aggregate fair market value of $5 million or more; (4) any liquidation,
spinoff, splitoff, splitup or dissolution of the Company by or on behalf of a
related person; (5) any recapitalization or reclassification of the securities
of the Company 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.

51
<PAGE>

THE ZIONS BOARD

DIRECTOR LIABILITY

The Articles provide that a director shall not be liable to Zions or its
shareholders for monetary damages 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) the authorization of the unlawful payment of
dividends and (iv) transactions in which a director receives an improper
benefit.

CLASSIFIED BOARD

The Articles provide that the Zions Board shall have three classes, each
consisting of one-third (or as near as may be) of the whole number of the
Zions Board. 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 constitutes the full Zions Board 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 Zions Board, or by the shareholders of the Company 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 the Zions Board, including vacancies resulting from an
increase in the size of the Zions Board, may be filled by the affirmative vote
of a majority of the remaining directors even though less than a quorum of the
Zions Board. The directors elected by the Zions 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.

REMOVAL OF DIRECTORS

The Articles provide that any director (or the entire Zions Board) 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.

SHAREHOLDER RIGHTS PLAN

In September 1996, the Zions Board adopted a Shareholder Protection Rights
Plan, dated September 21, 1996 (the "Rights Plan"), with ZFNB, as rights
agent, and declared a dividend of one right (a "Right") on each outstanding
share of Common Stock. The Rights Plan was not adopted in response to any
specific effort to acquire control of the Company. Rather, it was adopted to
deter abusive takeover tactics that can be used to deprive shareholders of the
full value of their investment.

Under the Rights Plan, until it is announced that a person or group has
acquired 10% or more of the Common Stock (an "Acquiring Person") or commences
a tender offer that will result in such person or group owning 10% or more of
the 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 $90.00.

Upon announcement that any person or group has become an Acquiring Person,
then 10 days thereafter (or such earlier or later date as the Zions Board may
decide) (the "Flip-in Date") each Right (other than Rights beneficially owned
by any Acquiring Person or transferees thereof, which Rights

52
<PAGE>

become void) will entitle its holder to purchase, for the exercise price, a
number of shares of Common Stock or Participating Preferred Stock having a
market value of twice the exercise price.

Also, if after an Acquiring Person controls the Zions Board, the Company 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
Common Stock, the Zions Board may, at its option, exchange one share of Common
Stock for each Right.

The Rights may be redeemed by the Zions Board for $0.01 per Right prior to
the Flip-in Date.

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 10% of all the
votes entitled to be cast on any issue proposed to be considered at the
special meeting. Under the Company's bylaws, special meetings may be called by
the president or by the Zions Board.

AMENDMENT OF ARTICLES AND BYLAWS

The Articles require the affirmative votes of the holders of two-thirds of
all outstanding voting stock of the Company to approve any amendment to the
Articles, except that to repeal or amend the provisions in the Articles
regarding business transactions set forth under "--Voting Rights--Specific
Votes for Certain Transactions" above requires the affirmative vote of 80% of
the issued and outstanding stock entitled to vote. The Company's bylaws may be
amended by an affirmative vote of two-thirds of the total number of directors
constituting the entire Zions Board or by the affirmative vote of two-thirds
of the issued and outstanding shares entitled to vote.

MISCELLANEOUS

There are no preemptive rights, sinking fund provisions, conversion rights
or redemption provisions applicable to the Common Stock. Holders of fully paid
shares of Common Stock are not subject to any liability for further calls or
assessments.

ZFNB is the transfer agent and registrar for the Common Stock.

VALIDITY OF COMMON STOCK

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Callister Nebeker & McCullough, a Professional
Corporation, Salt Lake City, Utah and for the Underwriters by Sullivan &
Cromwell, Los Angeles, California. Sullivan & Cromwell regularly performs
legal services for the Company, and is representing the Company in connection
with the Sumitomo Acquisition.

53
<PAGE>

EXPERTS

The consolidated financial statements of the Company as of December 31, 1997
and 1996 and for each of the years in the three year period ended December 31,
1997 included herein have been included herein in reliance upon the report of
KPMG Peat Marwick LLP, the Company's independent certified public accountants,
included herein, and upon the authority of such firm as experts in accounting
and auditing.

The balance sheets at December 31, 1997 and 1996 and the related statements
of income, changes in shareholders' equity and cash flows for the years ended
December 31, 1997, 1996 and 1995 for The Sumitomo Bank of California have been
audited by Arthur Andersen LLP, Sumitomo's independent public accountants, as
indicated in their report (dated January 16, 1998) with respect thereto, and
have been incorporated by reference herein in reliance upon the report of said
firm, and upon the authority of such firm as experts in accounting and
auditing.

AVAILABLE INFORMATION

Zions is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "Exchange Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can
be inspected and copied at the public reference facilities of the Commission
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at 7 World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, at prescribed rates. Copies of
such materials can also be obtained at prescribed rates by mail addressed to
the Commission, Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549. In addition, the Common Stock is traded on the Nasdaq National
Market, and such reports, proxy statements and other information can also be
inspected at the offices of NASDAQ Operations, 1735 K Street, N.W.,
Washington, D.C. 20006. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.

This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement")
filed by Zions with the Commission under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), with
respect to the shares of Common Stock, to be issued by Zions pursuant to this
Prospectus. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in
the Registration Statement. The statements contained in this 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 qualified
in their 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 Commission 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 Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549.

54
<PAGE>

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed with the Commission by Zions are hereby
incorporated herein by reference and made a part hereof:

(a) Zions' Annual Report on Form 10-K for the year ended December 31, 1997,
filed on March 27, 1998;

(b) Zion's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998, filed on May 14, 1998;

(c) Zions' Current Reports on Forms 8-K filed on February 6, 1998, April 3,
1998, as amended on May 27, 1998, April 15, 1998 and May 18, 1998;

(d) The description of the Common Stock contained in the Form 10
registration statement filed by the Company, and any amendment or
report filed for the purpose of updating such description; and

(e) The description of the Zions' preferred share purchase rights contained
in the Form 8-A registration statement filed on October 10, 1996, and
any amendment or report filed for the purpose of updating such
description.

All documents and reports filed by Zions pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of shares of Common Stock shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of such
filing and any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified
or superseded for purposes hereof to the extent that a statement contained
herein or in any other subsequently filed document which also is, or is deemed
to be, incorporated herein by reference, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part hereof, except as so modified or superseded.

Zions hereby undertakes to provide without charge to each person to whom
this Prospectus has been delivered, upon the oral or written request of any
such person, a copy of any and all of the foregoing documents incorporated by
reference (other than exhibits to such documents which are not specifically
incorporated by reference in such documents). Requests for such documents
should be directed to Zions Bancorporation, One South Main, Suite 1380, Salt
Lake City, Utah 84111, Attention: Dale M. Gibbons, Chief Financial Officer
(801-524-4787).

55
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996.............. F-3
Consolidated Statements of Income for the years ended December 31, 1997,
1996 and 1995 ........................................................... F-4
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995...................................................... F-5
Consolidated Statements of Retained Earnings for the years ended December
31, 1997, 1996 and 1995.................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Zions Bancorporation:

We have audited the accompanying consolidated balance sheets of Zions
Bancorporation and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income, retained earnings, and cash flows
for each of the years in the three-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Zions
Bancorporation and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.

KPMG Peat Marwick LLP

Salt Lake City, Utah
January 26, 1998

F-2
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
------
Cash and due from banks................................. $ 626,814 $ 453,990
Money market investments:
Interest-bearing deposits............................. 61,871 47,746
Federal funds sold.................................... 402,879 260,023
Security resell agreements............................ 349,338 305,660
Investment securities:
Held to maturity, at cost (approximate market value
$2,162,588 and $1,484,754)........................... 2,142,727 1,475,409
Available for sale, at market......................... 485,686 474,158
Trading account....................................... 83,681 34,076
Loans:
Loans held for sale at cost, which approximates
market............................................... 178,642 150,467
Loans, leases, and other receivables.................. 4,735,783 3,727,223
---------- ----------
4,914,425 3,877,690
Less:
Unearned income and fees, net of related costs....... 42,775 40,541
Allowance for loan losses............................ 80,481 76,803
---------- ----------
Net loans........................................ 4,791,169 3,760,346
Premises and equipment.................................. 135,980 102,701
Goodwill and core deposit intangibles................... 158,836 44,885
Other real estate owned................................. 3,371 138
Other assets............................................ 279,418 157,281
---------- ----------
Total assets..................................... $9,521,770 $7,116,413
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
Noninterest-bearing................................... $1,782,716 $1,345,698
Interest-bearing:
Savings and money market............................. 3,478,275 2,710,312
Time:
Under $100,000..................................... 1,001,710 708,077
Over $100,000...................................... 408,717 241,313
Foreign.............................................. 183,044 114,292
---------- ----------
6,854,462 5,119,692
Securities sold, not yet purchased...................... 45,067 76,831
Federal funds purchased................................. 294,109 155,407
Security repurchase agreements.......................... 976,766 771,361
Accrued liabilities..................................... 166,776 90,668
Federal Home Loan Bank advances and other borrowings:
Less than one year.................................... 59,883 14,349
Over one year......................................... 210,681 81,875
Long-term debt.......................................... 258,566 251,620
---------- ----------
Total liabilities................................ 8,866,310 6,561,803
---------- ----------
Shareholders' equity:
Capital stock:
Preferred stock, without par value; authorized
3,000,000 shares; issued and outstanding, none...... -- --
Common stock, without par value; authorized
100,000,000 shares; issued and outstanding,
63,962,100 shares and 63,468,480 shares............. 122,222 119,791
Net unrealized gain (loss) on securities available for
sale................................................. 2,678 (1,807)
Retained earnings..................................... 530,560 436,626
---------- ----------
Total shareholders' equity....................... 655,460 554,610
---------- ----------
Total liabilities and shareholders' equity....... $9,521,770 $7,116,413
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans...................... $401,284 $314,695 $251,521
Interest on loans held for sale................. 11,874 11,509 9,259
Interest on money market investments............ 84,607 51,712 56,140
Interest on securities:
Held to maturity:
Taxable..................................... 112,930 76,631 66,165
Nontaxable.................................. 11,312 14,554 12,424
Available for sale:
Taxable..................................... 28,798 26,573 24,726
Nontaxable.................................. 2,090 2,260 21
Trading account............................... 16,211 9,172 9,248
Lease financing................................. 13,190 11,885 9,991
-------- -------- --------
Total interest income...................... 682,296 518,991 439,495
-------- -------- --------
Interest expense:
Interest on savings and money market deposits... 110,882 91,865 83,080
Interest on time and foreign deposits........... 69,489 55,441 47,762
Interest on borrowed funds...................... 150,126 82,519 75,106
-------- -------- --------
Total interest expense..................... 330,497 229,825 205,948
-------- -------- --------
Net interest income........................ 351,799 289,166 233,547
Provision for loan losses........................ 6,175 4,640 3,000
-------- -------- --------
Net interest income after provision for
loan losses............................... 345,624 284,526 230,547
-------- -------- --------
Noninterest income:
Service charges on deposit accounts............. 43,732 35,195 28,884
Other service charges, commissions, and fees.... 38,274 28,701 24,370
Trust income.................................... 6,757 5,195 4,355
Investment securities gain (loss), net.......... 797 115 (148)
Trading account income (loss)................... 5,716 2,721 (1,247)
Loan sales and servicing income................. 38,768 35,128 24,254
Other........................................... 9,123 7,215 8,343
-------- -------- --------
Total noninterest income................... 143,167 114,270 88,811
-------- -------- --------
Noninterest expense:
Salaries and employee benefits.................. 159,973 129,708 105,527
Occupancy, net.................................. 16,911 13,668 10,972
Furniture and equipment......................... 23,695 17,133 13,486
Other real estate expense (income).............. 251 (298) 81
Legal and professional services................. 7,789 5,263 4,395
Supplies........................................ 8,108 6,582 5,305
Postage......................................... 6,823 5,658 5,190
Advertising..................................... 7,380 5,789 5,276
FDIC premiums................................... 737 11 4,123
Merger expense.................................. 2,707 -- --
Amortization of goodwill and core deposit
intangibles.................................... 5,860 2,851 2,612
Amortization of mortgage servicing assets....... 2,152 1,299 1,148
Other........................................... 58,832 47,608 37,071
-------- -------- --------
Total noninterest expense.................. 301,218 235,272 195,186
-------- -------- --------
Income before income taxes....................... 187,573 163,524 124,172
Income taxes..................................... 65,211 56,101 41,787
-------- -------- --------
Net income................................. $122,362 $107,423 $ 82,385
======== ======== ========
Weighted-average common and common-equivalent
shares outstanding during the year.............. 64,629 63,787 60,013
======== ======== ========
Net income per common share:
Basic........................................... $ 1.92 $ 1.70 $ 1.39
======== ======== ========
Diluted......................................... $ 1.89 $ 1.68 $ 1.37
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income........................ $ 122,362 $ 107,423 $ 82,385
Adjustments to reconcile net
income to net cash provided by
operating activities:
Provision for loan losses....... 6,175 4,640 3,000
Write-downs of other real estate
owned.......................... 324 -- 180
Depreciation of premises and
equipment...................... 18,027 14,315 10,998
Amortization of intangible
assets......................... 8,012 4,150 3,760
Amortization of net
premium/discount on investment
securities..................... 5,498 5,421 3,821
Accretion of unearned income and
fees, net of related costs..... 1,953 7,632 6,324
Proceeds from sales of trading
account securities............. 119,209,754 80,374,843 112,293,128
Increase in trading account
securities..................... (119,259,359) (80,345,212) (112,157,509)
Net loss (gain) on sales of
investment securities.......... (797) (115) 148
Proceeds from loans held for
sale........................... 742,244 664,327 440,245
Increase in loans held for sale. (764,066) (671,343) (454,532)
Net gain on sales of loans,
leases, and other assets....... (27,948) (26,866) (16,195)
Net gain on sales of other real
estate owned................... (214) (265) (169)
Change in accrued income taxes.. 677 4,677 (7,231)
Change in accrued interest
receivable..................... (19,776) (6,938) (2,389)
Change in other assets.......... (94,960) 18,181 (3,410)
Change in accrued interest
payable........................ 4,360 (661) 890
Change in accrued liabilities... 70,398 5,067 7,279
------------- ------------ -------------
Net cash provided by operating
activities................... 22,664 159,276 210,723
------------- ------------ -------------
Cash flows from investing
activities:
Net decrease (increase) in money
market investments............... (186,534) 97,897 (241,328)
Proceeds from sales of investment
securities held to maturity...... -- -- 6,950
Proceeds from maturities of
investment securities held to
maturity......................... 982,883 377,736 291,157
Purchases of investment
securities held to maturity...... (1,626,404) (667,657) (342,874)
Proceeds from sales of investment
securities available for sale.... 282,383 133,590 192,071
Proceeds from maturities of
investment securities available
for sale......................... 100,180 134,401 302,443
Purchases of investment
securities available for sale.... (315,014) (303,745) (472,171)
Proceeds from sales of loans and
leases........................... 968,717 765,341 627,855
Net increase in loans and leases.. (1,510,682) (1,422,625) (1,013,932)
Purchases of assets to be leased.. -- (8,514) --
Principal collections on
leveraged leases................. 5,748 -- 38
Proceeds from sales of premises
and equipment.................... 2,850 806 726
Purchases of premises and
equipment........................ (38,562) (22,303) (17,963)
Proceeds from sales of other real
estate owned..................... 3,317 1,594 1,899
Proceeds from sales of mortgage-
servicing rights................. 1,771 1,339 1,547
Purchases of mortgage-servicing
rights........................... (3,123) (1,625) (423)
Proceeds from sales of other
assets........................... 415 773 479
Purchase of other assets.......... -- (18,887) (218)
Cash paid for acquisition, net of
cash received.................... (33,273) 3,540 1,568
------------- ------------ -------------
Net cash used in investing
activities................... (1,365,328) (928,339) (662,176)
------------- ------------ -------------
Cash flows from financing
activities:
Net increase in deposits.......... 1,185,585 494,514 352,321
Net change in short-term funds
borrowed......................... 349,884 138,733 252,083
Proceeds from FHLB advances over
one year......................... 180,000 4,201 --
Payments on FHLB advances over
one year......................... (56,194) (18,143) (16,861)
Payments on leveraged leases...... (5,748) -- --
Proceeds from issuance of long-
term debt........................ 7,500 200,000 --
Payments on long-term debt........ (554) (4,969) (1,953)
Proceeds from issuance of common
stock............................ 3,168 1,178 1,291
Payments to redeem common stock... (119,725) (21,635) (18,523)
Dividends paid.................... (28,428) (25,033) (20,592)
------------- ------------ -------------
Net cash provided by financing
activities................... 1,515,488 768,846 547,766
------------- ------------ -------------
Net increase (decrease) in cash and
due from banks.................... 172,824 (217) 96,313
Cash and due from banks at
beginning of year................. 453,990 454,207 357,894
------------- ------------ -------------
Cash and due from banks at end of
year.............................. $ 626,814 $ 453,990 $ 454,207
============= ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.

F-5
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year...................... $436,626 $354,236 $292,443
Net income........................................ 122,362 107,423 82,385
Cash dividends:
Preferred, paid by subsidiaries to minority
shareholders................................... (41) (36) (38)
Common, per share of $0.4700 in 1997, $0.4250 in
1996 and $0.3525 in 1995....................... (28,387) (24,997) (20,554)
-------- -------- --------
Balance at end of year............................ $530,560 $436,626 $354,236
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS--Zions Bancorporation (the Parent) is a multibank holding company
organized under the laws of Utah in 1955, which provides a full range of
banking and related services through its subsidiaries operating primarily in
Utah, Idaho, Nevada, Arizona, Colorado, and California.

BASIS OF FINANCIAL STATEMENT PRESENTATION--The consolidated financial
statements include the accounts of Zions Bancorporation and its subsidiaries
(the Company). All significant intercompany accounts and transactions have
been eliminated in consolidation. Certain prior year amounts have been
reclassified to conform to the 1997 presentation. Prior year amounts have also
been restated for a significant acquisition accounted for under the pooling of
interest method. (See Note 2)

The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of
the balance sheet and revenues and expenses for the period. Actual results
could differ from those estimates.

SECURITY RESELL AGREEMENTS--Security resell agreements represent overnight
and term agreements, the majority maturing within 30 days. Either the Company
or, in some instances, third parties on behalf of the Company take possession
of underlying securities. The market value of such securities is monitored
throughout the contract term to ensure that asset value remains sufficient to
protect against counterparty default. Security resell agreements averaged
approximately $1,321,763,000 during 1997, and the maximum amount outstanding
at any month-end during 1997 was $1,675,714,000.

INVESTMENT SECURITIES--The Company classifies its investment securities in
one of three categories: trading, available for sale, or held to maturity.
Trading securities are bought and held principally for the purpose of selling
them in the near term. Held to maturity securities are those securities which
the Company has the ability and intent to hold until maturity. All other
securities not included in trading or held to maturity are classified as
available for sale.

Trading securities (including futures and options used to hedge trading
positions against interest rate risk) and available for sale securities are
recorded at fair value. Held to maturity securities are recorded at cost,
adjusted for the amortization or accretion of premiums or discounts.
Unrealized holding gains and losses on trading securities are included in
earnings. Unrealized holding gains and losses, net of related tax effect, on
available for sale securities are excluded from earnings and are reported as a
separate component of shareholders' equity until realized. Transfers of
securities between categories are recorded at fair value at the date of
transfer. Unrealized holding gains and losses are recognized in earnings for
transfers into trading securities. Unrealized holding gains or losses
associated with transfers of securities from held to maturity to available for
sale are recorded as a separate component of shareholders' equity. The
unrealized holding gains or losses included in the separate component of
equity for securities transferred from available for sale to held to maturity
are maintained and amortized into earnings over the remaining life of the
security as an adjustment to yield in a manner consistent with the
amortization or accretion of premium or discount on the associated security.

A decline in the market value of any available for sale or held to maturity
security below cost that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the security.

F-7
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Premiums and discounts are amortized or accreted over the life of the
related held to maturity security as an adjustment to yield using the
effective-interest method. Dividend and interest income are recognized when
earned. Realized gains and losses for securities classified as available for
sale and held to maturity are included in earnings and are derived using the
specific-identification method of determining the cost of securities sold.

LOAN FEES--Nonrefundable fees and related direct costs associated with the
origination of loans are deferred. The net deferred fees and costs are
recognized in interest income over the loan term using methods that generally
produce a level yield on the unpaid loan balance. Other nonrefundable fees
related to lending activities other than direct loan origination are
recognized as other operating income over the period the related service is
provided. Bankcard discounts and fees charged to merchants for processing
transactions through the Company are shown net of interchange discounts and
fees expense and are included in other service charges, commissions, and fees.

MORTGAGE SERVICING RIGHTS AND AMORTIZATION--Mortgage servicing rights are
accounted for under the provisions of Statement of Financial Accounting
Standards (Statement) No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, which became effective
January 1, 1997. Statement No. 125 superseded Statement No. 122, Accounting
for Mortgage Servicing Rights, but did not significantly change the
methodology used to account for servicing rights. The Company adopted
Statement No. 122 as of January 1, 1996 and at that time began capitalizing
originated servicing rights. The adoption did not have a material impact on
financial position or results of operations. Prior to 1996, capitalization was
limited to purchased servicing. The total cost of loans originated or
purchased is allocated between loans and servicing rights based on the
relative fair values of each. The servicing rights capitalized are amortized
in proportion to and over the period of estimated servicing income. Management
stratifies servicing rights based on origination period and interest rate and
evaluates the recoverability in relation to the impact of actual and
anticipated loan portfolio prepayment, foreclosure and delinquency experience.

Statement No. 122 also requires that all capitalized mortgage servicing
rights (MSRs) be evaluated for impairment based on the excess of the carrying
amount of MSRs over their fair value. For purposes of measuring impairment,
MSRs are stratified on the basis of interest rate, type of interest rate
(fixed or variable), and the type of loan (conventional or government).

ALLOWANCE FOR LOAN LOSSES--The allowance for loan losses is based on
management's periodic evaluation of the loan portfolio and reflects an amount
that, in management's opinion, is adequate to absorb losses in the existing
portfolio. In evaluating the portfolio, management takes into consideration
numerous factors, including current economic conditions, prior loan loss
experience, the composition of the loan portfolio, and management's estimate
of anticipated credit losses. Management believes that the allowance for loan
losses is adequate. While management uses available information to recognize
losses on loans, future additions to the allowance may be necessary based on
changes in economic conditions. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review the
Company's allowance for loan losses. Such agencies may require the Company to
recognize additions to the allowance based on their judgments using
information available to them at the time of their examination.

IMPAIRED LOANS--The Company considers a loan to be impaired when the accrual
of interest has been discontinued and based upon other criteria under the
statements. The amount of the impairment is measured based on the present
value of expected cash flows, the observable market price of the loan, or the
fair value of the collateral. An allowance for impairment losses is included
in the allowance

F-8
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

for loan losses through a provision for loan losses. The Company primarily
uses a cost recovery accounting method to recognize interest income on
impaired loans.

PREMISES AND EQUIPMENT--Premises and equipment are stated at cost, net of
accumulated depreciation and amortization. Depreciation, computed on the
straight-line method, is charged to operations over the estimated useful lives
of the properties. Leasehold improvements are amortized over the terms of
respective leases or the estimated useful lives of the improvements, whichever
is shorter.

NONPERFORMING ASSETS--Nonperforming assets are comprised of loans for which
the accrual of interest has been discontinued, loans for which the terms have
been renegotiated to less than market rates due to a weakening of the
borrower's financial condition (restructured loans), and other real estate
acquired primarily through foreclosure that is awaiting disposition.

Loans are generally placed on a nonaccrual status when principal or interest
is past due 90 days or more unless the loan is both well secured and in the
process of collection, or when in the opinion of management, full collection
of principal or interest is unlikely. Generally, consumer loans are not placed
on a nonaccrual status, inasmuch as they are generally charged off when they
become 120 days past due.

Other real estate owned is carried at the lower of cost or net realizable
value. Real estate may be considered to be in-substance foreclosed and
included herein when specific criteria are met. When property is acquired
through foreclosure, or substantially foreclosed, any excess of the related
loan balance over net realizable value is charged to the allowance for loan
losses. Subsequent write downs or losses upon sale, if any, are charged to
other real estate expense.

GOODWILL AND CORE DEPOSIT INTANGIBLES--The Company assesses the
recoverability of these intangible assets by determining whether the
amortization of the balance over its remaining life can be recovered through
future operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected future operating cash flows
using a discount rate reflecting the Company's average cost of funds. Goodwill
and core deposit intangibles are amortized using the straight-line method over
25 and 10 year periods, respectively.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS--In the ordinary course of business,
the Company has entered into off-balance sheet financial instruments
consisting of commitments to extend credit, commercial letters of credit, and
standby letters of credit. Such financial instruments are recorded in the
consolidated financial statements when they become payable. The credit risk
associated with these commitments is considered in management's determination
of the allowance for such items.

INTEREST RATE EXCHANGE CONTRACTS AND CAP AND FLOOR AGREEMENTS--The Company
enters into interest rate exchange contracts (swaps) and cap and floor
agreements as part of its overall asset and liability duration and interest
rate risk management strategy. The objective of these financial instruments is
to match estimated repricing periods of interest-sensitive assets and
liabilities in order to reduce interest rate exposure and or manage desired
asset and liability duration. With the exception of interest rate caps, these
instruments are used to hedge asset and liability portfolios and, therefore,
are not marked to market. Fees associated with these financial instruments are
accreted into interest income or amortized to interest expense on a straight-
line basis over the lives of the contracts and agreements. Gains or losses on
early termination of a swap are amortized on the remaining term of the
contract when the underlying assets or liabilities still exist. Otherwise,
such gains or losses are fully recorded as income or expense at the
termination of the contract. The net interest received or paid on

F-9
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

these contracts is reflected on a current basis in the interest income or
expense related to the hedged obligation or asset.

STATEMENT OF CASH FLOWS--The Company paid interest of $332.5 million, $230.0
million and $205.5 million, respectively, and income taxes of $61.6 million,
$46.4 million and $45.9 million, respectively, for the years ended December
31, 1997, 1996, and 1995. Loans transferred to other real estate owned totaled
$6.6 million, $0.4 million and $1.2 million, respectively, for the years ended
December 31, 1997, 1996 and 1995.

INCOME TAXES--Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.

The exercise of stock options under the Company's nonqualified stock option
plan, during 1997 and 1996, resulted in tax benefits reducing the Company's
current income tax payable and increasing common stock in the amounts of $1.2
million and $0.6 million in 1997 and 1996, respectively.

PENSION AND OTHER POSTRETIREMENT PLANS--The Company has a defined benefit
pension plan covering substantially all of its employees. The benefits are
based on years of service and employees' compensation levels. The cost of this
program is being funded currently. The Company sponsors a defined benefit
health care plan for substantially all retirees and employees. The Company has
other trustee retirement plans covering all qualified employees who have at
least one year of service.

TRUST ASSETS--Assets held by the Company in a fiduciary or agency capacity
for customers are not included in the consolidated financial statements as
such items are not assets of the Company.

STOCK OPTIONS--The Company's stock-based compensation plans are accounted
for under the provisions of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
Statement No. 123, Stock-Based Compensation, issued in 1995, allows a company
to recognize stock-based compensation using a fair value based method of
accounting if it so elects. The Company has elected not to adopt the
recognition provisions of Statement No. 123.

NET INCOME PER COMMON SHARE--Diluted net income per common share is based on
the weighted-average outstanding common shares during each year, including
common stock equivalents. Net income per common share is based on the
weighted-average outstanding common shares during each year.

STOCK SPLIT--On April 25, 1997, the Company's Board of Directors approved a
four-for-one split of the common stock. This action was effective on May 14,
1997 for shareholders of record as of May 9, 1997. A total of 43,347,903
shares of common stock were issued. All references to the number of common
shares and per common share amounts have been restated to reflect the split.

ACCOUNTING STANDARDS NOT ADOPTED--In June 1997, the Financial Accounting
Standards Board issued Statement No. 130, Reporting Comprehensive Income. This
statement establishes standards for reporting the components of comprehensive
income and requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be included in a

F-10
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income includes net income as well as
certain items that are reported directly within a separate component of
stockholders' equity and bypass net income. The provisions of this statement
are effective beginning with 1998 interim reporting. These disclosure
requirements will have no impact on financial position or results of
operations.

In June 1997, the Financial Accounting Standards Board issued Statement No.
131, Disclosures about Segments of an Enterprise and Related Information. The
provisions of this statement require disclosure of financial and descriptive
information about an enterprise's operating segments in annual and interim
financial reports issued to shareholders. The statement defines an operating
segment as a component of an enterprise that engages in business activities
that generate revenue and incur expense, whose operating results are reviewed
by the chief operating decision maker in the determination of resource
allocation and performance, and for which discrete financial information is
available. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This statement is
effective for fiscal years beginning after December 15, 1997, however, it is
not required to be applied for interim reporting in the initial year of
application.

2. MERGERS AND ACQUISITIONS

On May 16, 1997, the Company acquired Aspen Bancshares, Inc. in Colorado,
and its banking subsidiaries, Pitkin County Bank and Trust, Centennial Savings
Bank, F.S.B. and Valley National Bank of Cortez for 2,750,594 shares of common
stock. This acquisition was not significant to the Company's consolidated
financial statements and was accounted for as a purchase.

On July 11, 1997, the Company acquired Tri-State Bank in Idaho for 253,955
shares of common stock. Tri-State was subsequently merged into Zions
Bancorporation's wholly-owned subsidiary Zions First National Bank. The
acquisition was not significant to the Company's consolidated financial
statements and was accounted for as a pooling of interests.

On July 18, 1997, the Company acquired 27 Wells Fargo Bank Offices in
Arizona, Nevada, and Utah and on September 20, 1997, the Company acquired 4
additional Wells Fargo Branches in Utah. The acquisitions were not significant
to the consolidated financial statements and were accounted for as purchases.

On October 17, 1997, the Company acquired Sun State Capital Corporation in
Nevada and merged its subsidiary, Sun State Bank, into the Company's wholly-
owned subsidiary, Nevada State Bank. The Company issued 584,236 shares of
common stock and paid $16.1 million in cash in the acquisition. The
acquisition was not significant and was accounted for as a purchase.

On November 14, 1997, the Company acquired GB Bancorporation and its banking
subsidiary Grossmont Bank, in San Diego, California for 4,702,048 shares of
common stock. The merger was accounted for as a pooling of interests. GB
Bancorporation's total assets were approximately $814 million on the
acquisition date. Total interest and noninterest income and net income of
GB Bancorporation for the year ended December 31, 1996 were $43,412,000 and
$6,073,000, respectively. The Company's total interest and noninterest income
and net income, prior to restatement for the acquisition of GB Bancorporation,
were $589,849,000 and $101,350,000, respectively, for the year ended December
31, 1996. Total GB Bancorporation interest and noninterest income and net
income for the period January 1 through November 14, 1997 were $52,254,000 and
$8,447,000, respectively. Total interest and noninterest income and net income
of GB Bancorporation for the year ended December 31, 1997 were $61,608,000 and
$10,530,000, respectively. The acquisition was considered significant and
prior year amounts have been restated.

F-11
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

On January 6, 1998, the Company acquired Vectra Banking Corporation and its
banking subsidiary Vectra Bank located in Denver, Colorado for 4,021,303
shares of common stock. Vectra Banking Corporation had total assets of
approximately $728 million (unaudited) at the date of acquisition. This
transaction will be accounted for as a pooling of interests.

On January 23, 1998, the Company acquired Sky Valley Bank Corp. in Alamosa,
Colorado, and its banking subsidiary, The First National Bank in Alamosa for
572,817 shares of common stock. Sky Valley Bank Corp. had total assets of
approximately $122 million (unaudited) at the date of acquisition. The
acquisition will be accounted for as a pooling of interests.

On September 4, 1997, the Company announced the definitive agreement to
acquire Tri-State Finance Corporation and its banking subsidiary Tri-State
Bank in Denver, Colorado in exchange for Zions Bancorporation common stock. As
of December 31, 1997, Tri-State Finance Corporation had total assets of
approximately $128 million (unaudited). The transaction is intended to be
accounted for as a pooling of interests, and is expected to close in the first
quarter of 1998.

On December 22, 1997, the Company announced a definitive agreement had been
reached to acquire SBT Bankshares, Inc. in Colorado Springs, Colorado, and its
banking subsidiary State Bank and Trust of Colorado Springs in exchange for
Zions Bancorporation common stock. At December 31, 1997, SBT Bankshares, Inc.
had total assets of approximately $86 million (unaudited). The transaction is
intended to be accounted for as a pooling of interests and is expected to
close in the second quarter of 1998.

On December 29, 1997, the Company announced a definitive agreement had been
reached to acquire FP Bancorp, Inc. in Escondido, California, and its banking
subsidiary First Pacific National Bank in exchange for Zions Bancorporation
common stock. Total assets of FP Bancorp, Inc. were approximately $353 million
(unaudited) as of December 31, 1997. This transaction is intended to be
accounted for as a pooling of interests and is expected to close in the second
quarter of 1998.

On January 22, 1998, the Company announced a definitive agreement to acquire
Routt County National Bank Corporation in Steamboat Springs, Colorado, and its
banking subsidiary First National Bank of Colorado in exchange for Zions
Bancorporation common stock. As of December 31, 1997, Routt County National
Bank Corporation had total assets of approximately $93 million (unaudited).
This transaction is intended to be accounted for as a pooling of interests and
is expected to close in the second quarter of 1998.

F-12
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. INVESTMENT SECURITIES

Investment securities as of December 31, 1997, are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
HELD TO MATURITY
-------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government agencies and
corporations:
Small Business Administration
loan-backed securities.......... $ 440,615 $ 8,728 $ 476 $ 448,867
Other agency securities.......... 1,409,835 6,844 1,079 1,415,600
States and political subdivisions.. 210,675 5,384 808 215,251
Mortgage-backed securities......... 81,602 1,319 51 82,870
---------- ------- ------ ----------
$2,142,727 $22,275 $2,414 $2,162,588
========== ======= ====== ==========
<CAPTION>
AVAILABLE FOR SALE
-------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities........... $ 31,387 $ 319 $ -- $ 31,706
U.S. government agencies........... 169,767 171 3,329 166,609
State and political subdivisions... 25,858 1,082 8 26,932
Mortgage- and other asset-backed
securities........................ 27,815 468 35 28,248
---------- ------- ------ ----------
254,827 2,040 3,372 253,495
Equity securities:
Mutual funds:
Accessor Funds, Inc. .......... 109,530 1,456 28 110,958
Federal Home Loan Bank stock..... 90,537 -- -- 90,537
Other stock...................... 26,459 4,273 36 30,696
---------- ------- ------ ----------
$ 481,353 $ 7,769 $3,436 $ 485,686
========== ======= ====== ==========
</TABLE>

Investment securities as of December 31, 1996, are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
HELD TO MATURITY
-------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities........... $ 29,573 $ 230 $ 24 $ 29,779
U.S. government agencies and corpo-
rations:
Small Business Administration
loan-backed securities.......... 487,748 5,269 1,232 491,785
Other agency securities.......... 629,271 2,292 2,409 629,154
States and political subdivisions.. 260,963 5,136 938 265,161
Mortgage-backed securities......... 67,854 1,143 122 68,875
---------- ------- ------ ----------
$1,475,409 $14,070 $4,725 $1,484,754
========== ======= ====== ==========
</TABLE>

F-13
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
AVAILABLE FOR SALE
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury securities............. $ 19,580 $ 54 $ 8 $ 19,626
U.S. government agencies............. 135,530 330 4,397 131,463
State and political subdivisions..... 39,118 1,652 4 40,766
Mortgage- and other asset-backed
securities.......................... 86,007 722 1,864 84,865
-------- ------ ------ --------
280,235 2,758 6,273 276,720
Equity securities:
Mutual funds:
Accessor Funds, Inc.............. 109,071 390 361 109,100
Federal Home Loan Bank stock....... 79,593 -- -- 79,593
Other stock........................ 8,168 577 -- 8,745
-------- ------ ------ --------
$477,067 $3,725 $6,634 $474,158
======== ====== ====== ========
</TABLE>

The change in net unrealized holding gains (losses) on securities available
for sale for the years ended December 31, 1997, 1996 and 1995, was $4,485,000,
($3,772,000) and $7,831,000, respectively, after related tax effect. These
gains (losses) are collectively reported as a separate component of
shareholders' equity with December 31, 1997 and 1996, balances of $2,678,000
and ($1,807,000), respectively, after related tax effect.

The amortized cost and estimated market value of investment securities as of
December 31, 1997, by contractual maturity, excluding equity securities, are
shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties (in thousands):

<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
--------------------- ----------------------
ESTIMATED
AMORTIZED MARKET AMORTIZED ESTIMATED
COST VALUE COST MARKET VALUE
---------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Due in one year or less........ $ 148,359 $ 149,776 $ 73,111 $ 72,824
Due after one year through five
years......................... 803,195 811,934 117,302 116,834
Due after five years through
ten years..................... 1,025,697 1,033,464 44,452 44,328
Due after ten years............ 165,476 167,414 19,962 19,509
---------- ---------- -------- --------
$2,142,727 $2,162,588 $254,827 $253,495
========== ========== ======== ========
</TABLE>

Gross gains of $8,996,000, $372,000 and $1,129,000 and gross losses of
$8,199,000, $257,000 and $1,277,000 were realized on sales and write downs of
investment securities for the years ended December 31, 1997, 1996 and 1995,
respectively.

As of December 31, 1997 and 1996, securities with an amortized cost of
$744,339,000 and $605,114,000, respectively, were pledged to secure public and
trust deposits, advances, and for other purposes as required by law.

F-14
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Loans held for sale................................. $ 178,642 $ 150,467
Commercial, financial, and agricultural............. 1,216,591 904,076
Real estate:
Construction...................................... 482,907 346,796
Other............................................. 2,342,450 1,969,595
Consumer............................................ 450,422 334,764
Lease financing..................................... 176,419 159,825
Other receivables................................... 66,994 12,167
---------- ----------
$4,914,425 $3,877,690
========== ==========
</TABLE>

As of December 31, 1997 and 1996, loans with a carrying value of
$153,661,000 and $73,661,000, respectively, were pledged as security for
Federal Home Loan Bank advances.

During 1997, 1996 and 1995, sales of loans held for sale totaled $733
million, $654 million and $437 million, respectively. Consumer and other loan
securitizations totaled $951 million in 1997, $743 million in 1996, and $615
million in 1995, and relate primarily to loans sold under revolving
securitization structures. Gain on the sales, excluding servicing, of both
loans held for sale and loan securitizations amounted to $26.7 million in
1997, $24.4 million in 1996 and $14.0 million in 1995. Income related to
securitizations is recognized on the basis of cash flows received from the
securitized assets, which does not differ materially from immediate gain
recognition.

The allowance for loan losses is summarized as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year.................. $ 76,803 $73,437 $67,018
Allowance for loan losses of companies
acquired..................................... 5,544 2,566 6,202
Additions:
Provision for loan losses................... 6,175 4,640 3,000
Recoveries.................................. 6,316 6,083 5,900
Deductions:
Loan charge-offs............................ (14,357) (9,923) (8,683)
-------- ------- -------
Balance at end of year........................ $ 80,481 $76,803 $73,437
======== ======= =======
</TABLE>

At December 31, 1997, 1996 and 1995, the allowance for loan losses includes
an allocation of $8,852,000, $6,218,000 and $7,954,000, respectively, related
to commitments to extend credit and standby letters of credit.

F-15
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Nonperforming loans, leases, and related interest foregone are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Nonaccrual loans and leases....................... $11,907 $12,704 $10,875
Restructured loans and leases..................... 691 857 249
------- ------- -------
Total......................................... $12,598 13,561 11,124
======= ======= =======
Contractual interest due.......................... $ 1,250 1,453 1,100
Interest recognized............................... 809 720 474
------- ------- -------
Net interest foregone......................... $ 441 $ 733 $ 626
======= ======= =======
</TABLE>

The Company's total recorded investment in impaired loans included in
nonaccrual loans and leases above, amounted to $7,117,000 and $7,752,000 as of
December 31, 1997 and 1996, respectively. Included in the allowance for loan
losses as of December 31, 1997 and 1996, is a required allowance of $46,000
and $25,000, respectively, on $290,000 and $1,030,000, respectively, of the
recorded investment in impaired loans. Contractual interest due and interest
foregone on impaired loans, both included in the calculations for
nonperforming loans and leases above, totaled $554,000 and $204,000,
respectively, for the year ended December 31, 1997, and $846,000 and $372,000,
respectively, for the year ended December 31, 1996. The average recorded
investment in impaired loans amounted to $6,421,000 in 1997 and $5,450,000 in
1996.

5. CONCENTRATIONS OF CREDIT RISK

Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed completely to perform as contracted.
Concentrations of credit risk (whether on- or off-balance sheet) that arise
from financial instruments exist for groups of customers or counterparties
when they have similar economic characteristics that would cause their ability
to meet contractual obligations to be similarly affected by changes in
economic or other conditions. The Company does not have significant exposure
to any individual customer or counterparty.

Most of the Company's business activity is with customers located within the
states of Utah, Idaho, Nevada, Arizona, Colorado, and California. The
commercial loan portfolio is well diversified, consisting of approximately 11
industry classification groupings. As of December 31, 1997, the larger
concentrations of risk in the commercial loan and leasing portfolio are
represented by the real estate and construction, business services and
transportation, manufacturing, and retail industry groupings, which comprise
approximately 29%, 19%, 9% and 7%, respectively, of the portfolio. The Company
has minimal credit exposure from lending transactions with highly leveraged
entities and has no foreign loans.

F-16
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. PREMISES AND EQUIPMENT

The following table presents comparative data for premises and equipment (in
thousands):

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land.................................................... $ 27,651 $ 21,065
Buildings............................................... 74,313 57,292
Furniture and Equipment................................. 125,378 99,764
Leasehold Improvements.................................. 15,342 13,204
-------- --------
Total................................................. 242,684 191,325
Less accumulated depreciation and amortization.......... 106,704 88,624
-------- --------
$135,980 $102,701
======== ========
</TABLE>

Depreciation and amortization expense totaled $18.0 million, $14.3 million
and $11.0 million in 1997, 1996 and 1995, respectively.

7. MORTGAGE SERVICING RIGHTS

Mortgage servicing rights are summarized as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year.................... $ 5,447 $ 2,023 $ 2,748
Additions....................................... 7,300 4,723 423
Amortization.................................... (2,152) (1,299) (1,148)
------- ------- -------
Balance at end of year.......................... $10,595 $ 5,447 $ 2,023
======= ======= =======
</TABLE>

At December 31, 1997 and 1996, the estimated fair value of mortgage
servicing rights was $14.2 million and $8.9 million, respectively. Fair value
is determined by discounting net estimated cash flows from mortgage servicing
activities using discount rates, current market rates, and estimated
prepayment rates among other assumptions. The Company did not incur any
impairment of mortgage rights.

8. DEPOSITS

Deposits are summarized as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Noninterest-bearing................................. $1,782,716 $1,345,698
Interest-bearing:
Savings and NOW................................... 812,019 630,568
Money market and super NOW........................ 2,666,256 2,079,744
Time under $100,000............................... 1,001,710 708,077
Time over $100,000................................ 408,717 241,313
Foreign........................................... 183,044 114,292
---------- ----------
$6,854,462 $5,119,692
========== ==========
</TABLE>

F-17
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Interest expense on deposits is summarized as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Savings and money market deposits:
Savings and NOW.................................. $ 21,492 $19,924 $22,705
Money market and super NOW....................... 89,390 71,941 60,375
-------- ------- -------
$110,882 $91,865 $83,080
======== ======= =======
Time deposits:
Under $100,000................................... $ 45,070 $37,838 $32,653
Over $100,000.................................... 18,065 12,212 7,930
Foreign............................................ 6,354 5,391 7,179
-------- ------- -------
$ 69,489 $55,441 $47,762
======== ======= =======
</TABLE>

At December 31, 1997, the scheduled maturities of time deposits are as
follows (in thousands):

<TABLE>
<S> <C>
1998............................................................ $1,089,353
1999............................................................ 176,053
2000............................................................ 91,076
2001............................................................ 24,966
2002 and thereafter............................................. 28,979
----------
$1,410,427
==========
</TABLE>

9. SECURITY REPURCHASE AGREEMENTS

Security repurchase agreements represent funds borrowed on a short-term
basis through the sale of securities to counterparties under agreements to
repurchase the same securities. The Company participates in overnight and term
repurchase agreements. Most of the overnight agreements are performed with
sweep accounts in conjunction with a master repurchase agreement. In this
case, securities are pledged for and interest is paid on the collected balance
of the customers' accounts. The average interest rates pertaining to
outstanding repurchase agreements at December 31, 1997 were 5.8% for U.S.
Treasuries, 4.9% for U.S. government agencies, and 5.2% for Small Business
Administration pools. The average interest rates at December 31, 1996 were
5.8% for U.S. Treasuries and 5.1% for U.S. government agencies, Small Business
Administration pools and mortgage- and other asset-backed securities.

Repurchase agreements as of December 31, 1997 are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
MARKET
VALUE OF
CARRYING ACCRUED TOTAL UNDERLYING
AMOUNT INTEREST LIABILITY ASSETS
-------- -------- --------- ----------
<S> <C> <C> <C> <C>
U.S. Treasuries:
On demand........................... $ 25,770 $ 10 $ 25,780 $ 25,604
Up to 30 days....................... 198,228 80 198,308 197,208
30 to 60 days....................... 2,940 31 2,971 2,868
-------- ---- -------- --------
226,938 121 227,059 225,680
U.S. government agencies--overnight... 748,291 98 748,389 763,691
SBA pools--on demand.................. 1,537 10 1,547 2,140
-------- ---- -------- --------
Total............................... $976,766 $229 $976,995 $991,511
======== ==== ======== ========
</TABLE>

F-18
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Repurchase agreements as of December 31, 1996 are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
MARKET VALUE
CARRYING ACCRUED TOTAL OF UNDERLYING
AMOUNT INTEREST LIABILITY ASSETS
-------- -------- --------- -------------
<S> <C> <C> <C> <C>
U.S. Treasuries:
Overnight...................... $156,909 $ 30 $156,939 $157,014
On demand...................... 28,000 9 28,009 27,712
Up to 30 days.................. 1,335 2 1,337 1,315
30 to 60 days.................. 13,011 84 13,095 13,042
-------- ---- -------- --------
199,255 125 199,380 199,083
U.S. government agencies:
Overnight...................... 375,672 45 375,717 375,914
On demand...................... 2,263 117 2,380 2,060
30 to 60 days.................. 1,903 33 1,936 1,956
-------- ---- -------- --------
379,838 195 380,033 379,930
SBA pools:
Overnight...................... 177,352 21 177,373 177,824
On demand...................... 14,056 583 14,639 14,253
-------- ---- -------- --------
191,408 604 192,012 192,077
Mortgage- and other asset-backed
securities--overnight........... 860 -- 860 860
-------- ---- -------- --------
Total........................ $771,361 $924 $772,285 $771,950
======== ==== ======== ========
</TABLE>

The average amount of outstanding repurchase agreements was approximately
$1,837,795,000 during 1997, and the maximum amount outstanding at any month-
end during 1997 was approximately $2,219,006,000.

10. INCOME TAXES

Income taxes are summarized as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Federal:
Current............................................ $54,168 $43,050 $32,988
Deferred........................................... 2,939 4,695 2,856
State................................................ 8,104 8,356 5,943
------- ------- -------
$65,211 $56,101 $41,787
======= ======= =======
</TABLE>

F-19
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

A reconciliation between income tax expense computed using the statutory
federal income tax rate of 35 percent and actual income tax expense is as
follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Income tax expense at statutory federal rate...... $65,651 $57,336 $43,460
State income tax, net............................. 5,268 5,430 3,863
Nondeductible expenses............................ 2,832 1,611 1,159
Nontaxable interest............................... (5,720) (5,881) (4,317)
Tax credits....................................... (1,826) (1,597) (1,446)
Deferred tax assets realized...................... -- -- (766)
Decrease in valuation allowance................... (761) (66) --
Other items....................................... (233) (732) (166)
------- ------- -------
Income tax expense.............................. $65,211 $56,101 $41,787
======= ======= =======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of
December 31, 1997 and 1996, are presented below (in thousands):

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Gross deferred tax assets:
Book loan loss deduction in excess of tax............. $ 30,441 $ 29,045
Postretirement benefits............................... 2,517 3,641
Deferred compensation................................. 6,148 3,931
Deferred loan sales................................... 1,767 1,458
Deferred agreements................................... 3,427 --
Capital leases........................................ 291 322
Acquired net operating losses......................... 2,759 4,008
Other................................................. 8,586 7,997
-------- --------
Total deferred tax assets........................... 55,936 50,402
-------- --------
Less valuation allowance.............................. -- (761)
-------- --------
Total deferred tax assets net of valuation
allowance.......................................... 55,936 49,641
Gross deferred tax liabilities:
Premises and equipment, due to differences in
depreciation......................................... (5,226) (5,031)
FHLB stock dividends.................................. (15,536) (12,655)
Leasing operations.................................... (21,396) (15,116)
Prepaid pension reserves.............................. (818) (1,119)
Mortgage servicing.................................... (1,513) (959)
Other................................................. (1,992) (452)
-------- --------
Total deferred tax liabilities...................... (46,481) (35,332)
-------- --------
Statement No. 115 market equity adjustment.............. (1,655) 1,102
-------- --------
Net deferred tax assets............................. $ 7,800 $ 15,411
======== ========
</TABLE>

The Company has determined that it is not required to establish a valuation
reserve for the net deferred tax assets since it is "more likely than not"
that such net assets will be principally realized through future taxable
income and tax planning strategies. The Company's conclusion that it is "more
likely than not" that the net deferred tax assets will be realized is based on
history of growth in earnings and the prospects for continued growth and
profitability.

F-20
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company has net operating loss carryforwards totaling $16,825,000 that
expire in the years 2006 and 2007.

11. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

The following table presents comparative data for FHLB advances and other
borrowings over one year:

<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Medium Term Note payable by parent, 6.03%, due in 1999... $ 50,000 $ --
FHLB advances payable by subsidiaries, 5.46%-7.30%, due
1998-2014............................................... 153,681 73,661
Notes payable, 7.84%-8.08%, due 2005-2006................ 7,000 8,214
-------- -------
$210,681 $81,875
======== =======
</TABLE>

Federal Home Loan Bank advances as of December 31, 1997 and 1996, include
$148,610,000 and $73,661,000, respectively, borrowed by Zions First National
Bank (ZFNB), a wholly-owned subsidiary, under its line of credit with the
Federal Home Loan Bank of Seattle. The line of credit provides for borrowing
of amounts up to 10% of total assets. The line of credit is secured under a
blanket pledge whereby ZFNB maintains unencumbered security with par value,
which has been adjusted using a pledge requirement percentage based upon the
types of securities pledged, equal to at least 100% of outstanding advances,
and Federal Home Loan Bank stock.

Federal Home Loan Bank advances, as of December 31, 1997 also include
$5,000,000 borrowed by Centennial Savings Bank, F.S.B. (Centennial), a wholly-
owned subsidiary, from the Federal Home Loan Bank of Topeka. The note is
secured with a blanket pledge whereby Centennial maintains unencumbered
security with par value equal to at least 100% of the note outstanding and
Federal Home Loan Bank stock. There are no withdrawal and usage restrictions
on advances from the Federal Home Loan Bank of either Seattle or Topeka.

Maturities of Federal Home Loan Bank advances and other borrowings over one
year are as follows (in thousands):

<TABLE>
<S> <C>
1998.............................................................. $ 16,638
1999.............................................................. 71,657
2000.............................................................. 9,440
2001.............................................................. 2,427
2002.............................................................. 2,121
Thereafter........................................................ 108,398
--------
$210,681
========
</TABLE>

F-21
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. LONG-TERM DEBT

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

<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Guaranteed preferred beneficial interests in junior
subordinated deferrable interest debentures.......... $ 207,500 $200,000
Subordinated notes.................................... 50,000 50,000
Capital leases and other notes payable................ 1,066 1,620
--------- --------
$ 258,566 $251,620
========= ========
</TABLE>

The Guaranteed Preferred Beneficial Interests in Junior Subordinated
Deferrable Interest Debentures include $200 million of 8.536% debentures
issued by Zions Institutional Capital Trust A (ZICTA) and $7.5 million of
10.25% debentures issued by GB Capital Trust (GBCT).

The ZICTA debentures are direct and unsecured obligations of ZFNB and are
subordinate to the claims of depositors and general creditors. The Company has
irrevocably and unconditionally guaranteed all of ZFNB's obligations under the
debentures. The GBCT debentures are direct and unsecured obligations of the
Company through the acquisition of GB Bancorporation, and are subordinate to
other indebtedness and general creditors of the Company. Both ZICTA and GBCT
debentures have the right, with the approval of banking regulators, to early
redemption in 2006 and 2007, respectively. ZICTA and GBCT debentures require
semiannual interest payments and mature on December 15, 2026 and January 15,
2027, respectively.

Subordinated notes consists of $50,000,000 of 8 5/8% notes that mature in
2002. These notes are not redeemable prior to maturity. The subordinated notes
are unsecured and require semiannual interest payments in April and October.

The Company has plans to retire a portion of both the $50.0 million, 8 5/8%
subordinated notes and the $7.5 million, 10.25% GBCT Junior Subordinated
Debentures. It is anticipated that the Company will recognize a loss on these
retirements. As of December 31, 1997, this loss is indeterminate.

Maturities and sinking fund requirements on long-term debt at December 31,
1997 for each of the succeeding five years are as follows (in thousands):

<TABLE>
<CAPTION>
PARENT
CONSOLIDATED ONLY
------------ -------
<S> <C> <C>
1998.................................................. $ 152 $ --
1999.................................................. 97 --
2000.................................................. 107 --
2001.................................................. 83 --
2002.................................................. 50,091 50,000
Thereafter............................................ 208,036 7,732
-------- -------
$258,566 $57,732
======== =======
</TABLE>

F-22
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers,
to reduce its own exposure to fluctuations in interest rates, and to make a
market in U.S. government, agency, and municipal securities. These financial
instruments involve, to varying degrees, elements of credit, liquidity, and
interest rate risk in excess of the amount recognized in the balance sheets.

Contractual amounts of the off-balance sheet financial instruments used to
meet the financing needs of the Company's customers are as follows (in
thousands):

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Commitments to extend credit........................ $2,417,229 $1,958,995
Standby letters of credit:
Performance....................................... 79,216 80,281
Financial......................................... 27,903 31,261
Commercial letters of credit........................ 9,336 5,252
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require the payment of a fee. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the counterparty. Collateral varies but may
include accounts receivable, inventory, property, plant and equipment, and
income-producing properties.

Establishing commitments to extend credit gives rise to credit risk. As of
December 31, 1997, a significant portion of the Company's commitments is
expected to expire without being drawn upon; commitments totaling
$1,974,106,000 expire in 1998. As a result, the Company's actual future credit
exposure or liquidity requirements will be lower than the contractual amounts
of the commitments. The Company uses the same credit policies and procedures
in making commitments to extend credit and conditional obligations as it does
for on-balance sheet instruments. These policies and procedures include credit
approvals, limits, and monitoring.

Standby and commercial letters of credit are conditional commitments issued
by the Company generally to guarantee the performance of a customer to a third
party. The guarantees are primarily issued to support public and private
borrowing arrangements, including commercial paper, bond financing, and
similar transactions. Standby letters of credit include commitments in the
amount of $102,752,000 expiring in 1998 and $4,367,000 expiring thereafter
through 2006. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. The Company generally holds marketable securities and cash
equivalents as collateral supporting those commitments for which collateral is
deemed necessary.

Notional values of interest rate contracts are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
Caps and floors-written............................... $1,052,000 $825,000
Swaps-fixed........................................... 701,331 285,000
Forwards.............................................. 87,565 44,961
Options............................................... 3,000 --
</TABLE>

F-23
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company enters into interest rate caps, floors, exchanges contracts
(swaps), forwards, and options agreements as part of its overall asset and
liability duration and interest rate risk management strategy. These
transactions enable the Company to manage asset and liability durations, and
transfer, modify, or reduce its interest rate risk. With the exception of
interest rate caps, these instruments are used to hedge asset and liability
portfolios and, therefore, are not marked to market. The notional amounts of
the contracts are used to express volume, but the amounts potentially subject
to credit risk are much smaller. Exposure to credit risk arises from the
possibility of nonperformance by counterparties to the interest rate
contracts. The Company controls this credit risk (except futures contracts and
interest rate cap and floor contracts written, for which credit risk is de
minimus) through credit approvals, limits, and monitoring procedures. As the
Company generally enters into transactions only with high-quality
counterparties, losses associated with counterparty nonperformance on interest
rate contracts have been immaterial. Nevertheless, the related credit risk is
considered and, if material, will be provided for in an allowance for losses
on off-balance sheet financial instruments and included in other liabilities.

Interest rate caps and floors obligate one of the parties to the contract to
make payments to the other if an interest rate index exceeds a specified upper
"capped" level or if the index falls below a specified "floor" level. The
interest rate caps and floors to which the Company is a party at December 31,
1997, have remaining terms of four years.

Interest rate swaps generally involve the exchange of fixed and variable
rate interest payment obligations based on an underlying notional value,
without the exchange of the notional value. Entering into interest rate swap
agreements involves not only the risk of dealing with counterparties and their
ability to meet the terms of the contract but also the interest rate risk
associated with unmatched positions. Swaps to which the Company is a party at
December 31, 1997, have remaining terms ranging from 1 to 6 years.

Forwards are contracts for the delayed delivery of financial instruments in
which the seller agrees to deliver on a specified future date, a specified
instrument, at a specified price or yield. As of December 31, 1997, the
Company's forward contracts have remaining terms ranging from one to four
months. An option contract is an agreement that conveys to the purchaser the
right, but not the obligation, to buy or sell a quantity of a financial
instrument or commodity at a predetermined rate or price on a specified future
date.

As a market maker in U.S. government, agency, and municipal securities, the
Company enters into agreements to purchase and sell such securities. As of
December 31, 1997 and 1996, the Company had outstanding commitments to
purchase securities of $76,870,000 and $96,487,000, respectively, and
outstanding commitments to sell securities of $75,717,000 and $68,772,000,
respectively. These agreements at December 31, 1997, have remaining terms of
one month or less.

The contract or notional amount of financial instruments indicates a level
of activity associated with a particular class of financial instrument and is
not a reflection of the actual level of risk. As of December 31, 1997 and
1996, the regulatory risk-weighted values assigned to all off-balance sheet
financial instruments described herein totaled $296,823,000 and $263,029,000,
respectively.

The Company has $50.0 million available in lines of credit from two separate
institutions. At December 31, 1997, ZFNB had drawn $44.0 million on these
lines, with interest rates ranging from 6.21% to 6.27%. There were no
compensating balance arrangements on either of these lines of credit.

F-24
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company is a defendant in various legal proceedings arising in the
normal course of business. The Company does not believe that the outcome of
any such proceedings will have a material adverse effect on its consolidated
financial position, operations, or liquidity.

In connection with loans sold to (or serviced for) others, the Company is
subject to recourse obligations on approximately $26 million as of December
31, 1997.

The Company has commitments for leasing premises and equipment under the
terms of noncancelable operating leases expiring from 1997 to 2031. Future
aggregate minimum rental payments under existing noncancelable leases at
December 31, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
REAL
PROPERTY
REAL AND
PROPERTY, EQUIPMENT,
CAPITALIZED OPERATING
----------- ----------
<S> <C> <C>
1998................................................ $ 171 $ 8,012
1999................................................ 171 6,579
2000................................................ 171 5,165
2001................................................ 173 4,119
2002................................................ 173 3,098
Thereafter.......................................... 337 2,575
------ -------
$1,196 $29,548
====== =======
</TABLE>

Future aggregate minimum rental payments have been reduced by noncancelable
subleases as follows: 1998, $304,000; 1999, $216,000; 2000, $183,000; 2001,
$162,000; 2002, $162,000; and thereafter $7,129,000. Aggregate rental expense
on operating leases amounted to $9,970,000, $8,292,000 and $6,832,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.

14. STOCK OPTIONS

The Company adopted a qualified stock option plan in 1981, under which stock
options may be granted to key employees; and a nonqualified plan under which
options may be granted to nonemployee directors. Under the qualified plan and
nonqualified plan, respectively, 3,244,000 and 400,000 shares of common stock
were reserved. In connection with the acquisition of Aspen in 1997, Aspen's
outstanding qualified stock options were converted into 184,991 qualified
stock options of the Company, effectively increasing the number of common
stock shares reserved.

Qualified options are granted at a price not less than 100% of the fair
market value of the stock at the date of grant. Options granted are generally
exercisable in increments from one to four years after the date of grant and
expire six years after the date of grant. Under the nonqualified plan, options
expire five to ten years from the date of grant. At December 31, 1997, there
were 227,812 and 320,000 additional shares available for grant under the
qualified plan and nonqualified plan, respectively.

The per share weighted-average fair value of stock options granted during
1997, 1996 and 1995 was $10.74, $5.06 and $2.34, respectively, on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Expected dividend yield................... 1.55% 2.24% 3.27%
Risk-free interest rate................... 6.54 6.00 6.10
Expected volatility....................... 22.18 23.29 27.04
Expected life............................. 3.5 years 3.5 years 3.5 years
</TABLE>

F-25
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under Statement No. 123, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Net income (in thousands):
As reported...................................... $122,362 $107,423 $82,386
Pro forma........................................ 120,396 106,868 82,315
Earnings per share:
As reported:
Basic.......................................... $ 1.92 $ 1.70 $ 1.39
Dilutive....................................... 1.89 1.68 1.37
Pro forma:
Basic.......................................... 1.89 1.69 1.38
Dilutive....................................... 1.86 1.68 1.37
</TABLE>

Pro forma net income reflects only options granted in 1997, 1996, and 1995.
Therefore, the full impact of calculating compensation cost for stock options
under Statement No. 123 is not reflected in the pro forma net income amounts
presented above because compensation cost is reflected over the options'
vesting period and compensation cost of options granted prior to January 1,
1995 is not considered.

The following table is a summary of the Company's stock option activity and
related information for the three years ended December 31, 1997:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
NUMBER EXERCISE
OF SHARES PRICE
--------- ---------
<S> <C> <C>
Balance at December 31, 1994............................ 1,575,284 $ 6.22
Granted............................................... 280,900 10.66
Exercised............................................. (525,528) 4.64
Forfeited............................................. (33,260) 7.71
---------
Balance at December 31, 1995............................ 1,297,396 7.79
Granted............................................... 740,520 14.01
Exercised............................................. (395,920) 5.83
Forfeited............................................. (72,200) 3.53
Expired............................................... (10,000) 6.03
---------
Balance at December 31, 1996............................ 1,559,796 10.97
Acquired.............................................. 184,991 12.54
Granted............................................... 528,304 29.86
Exercised............................................. (644,967) 9.40
Forfeited............................................. (46,032) 13.25
---------
Balance at December 31, 1997............................ 1,582,092 18.04
=========
Outstanding options exercisable as of:
December 31, 1997..................................... 540,608 11.01
December 31, 1996..................................... 343,308 7.41
December 31, 1995..................................... 530,372 5.28
</TABLE>

F-26
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Selected information on stock options as of December 31, 1997 follows:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS EXERCISABLE OPTIONS
--------------------------------------- ------------------------
WEIGHTED-
WEIGHTED- AVERAGE WEIGHTED-
EXERCISE PRICE NUMBER OF AVERAGE REMAINING LIFE NUMBER OF AVERAGE
RANGE OPTIONS EXERCISE PRICE (YEARS) OPTIONS EXERCISE PRICE
-------------- --------- -------------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
$2.38 to $3.81.......... 156,800 $ 2.55 4.60 106,400 $ 2.44
$6.50 to $14.73......... 545,716 10.56 3.32 319,904 10.70
$18.13 to $31.00........ 879,576 25.43 5.18 114,304 19.85
--------- -------
1,582,092 $18.04 4.48 540,608 $11.01
========= =======
</TABLE>

15. COMMON STOCK

Changes in common stock are summarized as follows (amounts in thousands,
except share amounts):

<TABLE>
<CAPTION>
SHARES AMOUNT
---------- ---------
<S> <C> <C>
Balance at December 31, 1994.......................... 58,238,208 $ 79,193
Stock redeemed and retired............................ (1,500,160) (18,523)
Stock options:
Shares tendered and retired......................... (86,340) --
Exercised........................................... 525,528 2,081
Acquisition........................................... 5,596,044 50,726
---------- ---------
Balance at December 31, 1995.......................... 62,773,280 113,477
Stock redeemed and retired............................ (1,096,992) (21,635)
Stock options:
Shares tendered and retired......................... (58,520) --
Exercised........................................... 395,920 1,749
Acquisition........................................... 1,454,792 26,200
---------- ---------
Balance at December 31, 1996.......................... 63,468,480 119,791
Stock redeemed and retired............................ (3,572,603) (119,725)
Stock options:
Shares tendered and retired......................... (28,553) --
Exercised........................................... 421,991 4,321
Acquisitions.......................................... 3,672,785 117,835
---------- ---------
Balance at December 31, 1997.......................... 63,962,100 $ 122,222
========== =========
</TABLE>

F-27
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Basic and diluted earnings per common share, based on the weighted-average
outstanding shares, are summarized as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Basic:
Net income....................................... $122,362 $107,423 $82,385
Less preferred dividends......................... 41 36 38
-------- -------- -------
Net income applicable to common stock............ $122,321 $107,387 $82,347
======== ======== =======
Average common shares outstanding................ 63,868 63,194 59,435
======== ======== =======
Net income per common share--basic............... $ 1.92 $ 1.70 $ 1.39
======== ======== =======
Diluted:
Net income applicable to common stock............ $122,321 $107,387 $82,347
======== ======== =======
Average common shares outstanding................ 63,868 63,194 59,435
Stock option adjustment.......................... 761 593 578
-------- -------- -------
Average common shares outstanding--diluted....... 64,629 63,787 60,013
======== ======== =======
Net income per common share--diluted............. $ 1.89 $ 1.68 $ 1.37
======== ======== =======
</TABLE>

16. SHAREHOLDERS' PROTECTION RIGHTS PLAN

The Company has in place a Shareholders' Protection Rights Plan. The
Shareholders' Protection Rights Plan contains provisions intended to protect
shareholders in the event of unsolicited offers or attempts to acquire the
Company, including offers that do not treat all shareholders equally,
acquisitions in the open market of shares constituting control without
offering fair value to all shareholders, and other coercive or unfair takeover
tactics that could impair the Board of Directors' ability to represent
shareholders' interests fully. The Shareholders' Protection Rights Plan
provides that attached to each share of common stock is one right (a "Right")
to purchase one one-hundredth of a share of Participating Preferred Stock for
an exercise price of $90, subject to adjustment.

The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person that attempts to acquire the Company without
the approval of the Board of Directors. The Rights, however, should not affect
offers for all outstanding shares of common stock at a fair price and,
otherwise, in the best interests of the Company and its shareholders as
determined by the Board of Directors. The Board of Directors may, at its
option, redeem all, but not fewer than all, of the then outstanding Rights at
any time until the 10th business day following a public announcement that a
person or a group had acquired beneficial ownership of 10% or more of the
Company's outstanding common stock or total voting power.

17. REGULATORY MATTERS

The Company is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, if undertaken, could have a direct
material effect on the Company's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company must meet specific capital guidelines that involve
quantitative measures of the Company's assets, liabilities and certain off-
balance sheet

F-28
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

items as calculated under regulatory accounting practices. The Company's
capital amounts and classification are also subject to qualitative judgments
by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of December 31, 1997,
that the Company meets all capital adequacy requirements to which it is
subject.

As of December 31, 1997, the most recent notification from the Office of the
Comptroller of the Currency categorized the Company as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as
well capitalized, the Company must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the Company's category.

The Company's and its largest banking subsidiary, Zions First National
Bank's, actual capital amounts and ratios are as follows (in thousands):

<TABLE>
<CAPTION>
FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
-------------- -------------- --------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total capital (to risk-
weighted assets)
The Company................. $773,245 13.75% $449,950 8.00% $562,437 10.00%
Largest subsidiary.......... 604,475 18.22 265,430 8.00 331,788 10.00
Tier I capital (to risk-
weighted assets)
The Company................. 660,446 11.74 224,975 4.00 337,462 6.00
Largest subsidiary.......... 362,951 10.94 132,715 4.00 199,073 6.00
Tier I capital (to average
assets)
The Company................. 660,446 6.75 293,537 3.00 489,229 5.00
Largest subsidiary.......... 362,951 5.66 192,417 3.00 320,695 5.00
<CAPTION>
FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
-------------- -------------- --------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total capital (to risk-
weighted assets)
The Company................. $777,430 17.52% $354,934 8.00% $443,668 10.00%
Largest subsidiary.......... 568,159 19.47 233,485 8.00 291,857 10.00
Tier I capital (to risk-
weighted assets)
The Company................. 628,261 14.16 177,467 4.00 266,201 6.00
Largest subsidiary.......... 331,484 11.36 116,743 4.00 175,114 6.00
Tier I capital (to average
assets)
The Company................. 628,261 8.70 216,758 3.00 361,262 5.00
Largest subsidiary.......... 331,484 6.61 150,456 3.00 250,759 5.00
</TABLE>

F-29
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Dividends declared by the Company's national banking subsidiaries in any
calendar year may not, without the approval of the appropriate federal
regulator, exceed their net earnings for that year combined with their net
earnings less dividends paid for the preceding two years. At December 31,
1997, the Company's subsidiaries had approximately $60.9 million available for
the payment of dividends under the foregoing restrictions. In addition, the
banking subsidiaries must meet various requirements and restrictions under the
laws of the United States and state laws, including requirements to maintain
cash reserves against deposits and limitations on loans and investments with
affiliated companies. During 1997, cash reserve balances held with the Federal
Reserve banks averaged approximately $34.2 million.

18. RETIREMENT PLANS

The Company has a noncontributory defined benefit pension plan for eligible
employees. Plan benefits are based on years of service and employees'
compensation levels. Benefits vest under the plan upon completion of five
years of service. Plan assets consist principally of corporate equity and debt
securities, government fixed income securities, and cash investments.

The components of the net pension cost for the years ended December 31, 1997
and 1996, are as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Service cost--benefits earned during the period........... $ 3,316 $ 3,575
Interest cost on projected benefit obligation............. 4,246 4,042
Actual return on assets................................... (14,956) (8,282)
Net amortization and deferrals............................ 9,065 3,666
Income from curtailment................................... (1,551) --
-------- -------
Net pension cost........................................ $ 120 $ 3,001
======== =======
</TABLE>

Primary actuarial assumptions used in determining the net pension cost are
as follows:

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Assumed discount rate............................................ 7.50% 7.00%
Assumed rate of increase in compensation levels.................. 5.00 5.00
Expected long-term rate of return on assets...................... 9.00 9.00
</TABLE>

F-30
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The funded status of the plan as of December 31, 1997 and 1996, is as
follows (in thousands):

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.............................. $(56,713) $(46,838)
======== ========
Accumulated benefit obligation......................... $(59,903) $(52,546)
======== ========
Projected benefit obligation............................. $(65,083) $(60,542)
Plan assets at fair value................................ 71,972 59,127
-------- --------
Overfunded (unfunded) projected benefit obligation....... 6,889 (1,415)
Unrecognized net loss.................................... 1,555 6,782
Unrecognized prior service cost.......................... (3,804) (807)
Unrecognized net transition asset........................ (1,147) (1,782)
-------- --------
Prepaid pension cost..................................... $ 3,493 $ 2,778
======== ========
Primary actuarial assumptions (future periods):
Assumed discount rate.................................. 7.00% 7.50%
Assumed rate of increase in compensation levels........ 5.00 5.00
</TABLE>

Effective January 1, 1997, the plan was amended such that plan benefits are
now defined as a lump-sum cash value rather than an annuity at age 65. The
1997 income from curtailment resulted from the merger of Grossmont Bank plan
participants into the Company's plan at December 31, 1997.

The Company also sponsors an unfunded, nonqualified executive management
pension plan, which restores pension benefits limited by federal tax law.

In addition to the Company's defined benefit pension plan, the Company
sponsors a defined benefit health care plan that provides postretirement
medical benefits to full-time employees hired before January 1, 1993, who meet
minimum age and service requirements. The plan is contributory, with retiree
contributions adjusted annually, and contains other cost-sharing features such
as deductibles and coinsurance. Plan coverage is provided by self-funding or
health maintenance organizations (HMOs) options. Reductions in the Company's
obligations to provide benefits resulting from cost sharing changes have been
applied to reduce the plans unrecognized transition obligation. The Company's
retiree premium contribution rate is frozen at 50 percent of 1996 dollar
amounts. The Company's policy is to fund the cost of medical benefits in
amounts determined at the discretion of management.

The following table presents the plan's funded status reconciled with
amounts recognized in the Company's consolidated balance sheets at December
31, 1997 and 1996, as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................ $(1,653) $(2,181)
Fully eligible active plan participants................. (1,052) (836)
Other active plan participants.......................... (484) (535)
------- -------
(3,189) (3,552)
Plan assets at fair value................................. -- --
------- -------
Accumulated postretirement benefit obligation in excess of
plan assets.............................................. (3,189) (3,552)
Unrecognized net loss (gain).............................. (2,575) (2,628)
------- -------
Accrued postretirement benefit cost included in other
liabilities.............................................. $(5,764) $(6,180)
======= =======
</TABLE>

F-31
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Net periodic postretirement benefit cost for 1997 and 1996, includes the
following components (in thousands):

<TABLE>
<CAPTION>
1997 1996
----- ----
<S> <C> <C>
Service cost..................................................... $ 111 $195
Interest cost.................................................... 269 414
Net actuarial gain............................................... (486) --
----- ----
Net periodic postretirement benefit cost....................... $(106) $609
===== ====
</TABLE>

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% at both December 31, 1997 and 1996.

The actuarial assumed health care cost trend rate is 7.5% for 1998,
decreasing to an ultimate level of 5% for the years 2003 and thereafter. The
effect of a one-percentage point increase in the assumed health care cost
trend rate at December 31, 1997 would be a $1,000 increase to the aggregate
service and interest cost components of the net periodic postretirement health
care benefit cost and a $22,000 increase to the accumulated postretirement
benefit obligation for health care benefits.

The Company has an Employee Stock Savings Plan and an Employee Investment
Savings Plan (PAYSHELTER). Under PAYSHELTER, employees select from a nontax-
deferred or tax-deferred plan and several investment alternatives. Employees
can contribute from 1 to 15% of compensation, which is matched up to 50% by
the Company for contributions up to 5% and 25% for contributions greater than
5% up to 10%. The Company's contributions to the plans amounted to $2,189,362,
$1,726,000, and $1,404,000 for the years ended December 31, 1997, 1996, and
1995, respectively.

The Company has an employee profit-sharing plan. Contributions to the plan
are determined per a formula based on the Company's annual return on equity
modified for certain effects related to business combinations (required
minimum return of 14%). Accrued contributions to the plan amounted to
$2,330,000, $1,835,000 and $1,592,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

F-32
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks...... $ 626,814 $ 626,814 $ 453,990 $ 453,990
Money market investments..... 814,088 814,088 613,429 613,429
Investment securities........ 2,712,094 2,731,955 1,983,643 1,992,988
Loans, net................... 4,791,169 4,827,998 3,760,346 3,772,392
---------- ---------- ---------- ----------
Total financial assets... $8,944,165 $9,000,855 $6,811,408 $6,832,799
========== ========== ========== ==========
Financial liabilities:
Demand, savings, and money
market deposits............. $5,260,991 $5,260,991 $4,056,010 $4,056,010
Time deposits................ 1,410,427 1,407,243 949,390 950,751
Foreign deposits............. 183,044 183,156 114,292 114,406
Securities sold, not yet
purchased................... 45,067 45,067 76,831 76,831
Federal funds purchased and
security repurchase
agreements.................. 1,270,875 1,270,875 926,768 926,768
FHLB advances and other
borrowings.................. 270,564 278,375 96,224 96,224
Long-term debt............... 258,566 268,181 251,620 255,646
---------- ---------- ---------- ----------
Total financial
liabilities............. $8,699,534 $8,713,888 $6,471,135 $6,476,636
========== ========== ========== ==========
Off-balance sheet instruments:
Caps and floors:
Written.................... $ (1,099) $ (1,099) $ (4,372) $ (4,372)
Purchased.................. -- -- -- --
Swaps--fixed................. -- 4,642 -- 1,360
Forwards..................... -- (442) -- 53
---------- ---------- ---------- ----------
Total off-balance sheet
instruments............. $ (1,099) $ 3,101 $ (4,372) $ (2,959)
========== ========== ========== ==========
</TABLE>

Financial assets and financial liabilities other than investment securities
of the Company are not traded in active markets. The above estimates of fair
value require subjective judgments and are approximate. Changes in the
following methodologies and assumptions could significantly affect the
estimates.

FINANCIAL ASSETS--The estimated fair value approximates the carrying value
of cash and due from banks and money market investments. For securities, the
fair value is based on quoted market prices where available. If quoted market
prices are not available, fair values are based on quoted market prices of
comparable instruments or using a discounted cash flow model based on
established market rates. The fair value of fixed-rate loans is estimated by
discounting future cash flows using the London Interbank Offered Rate (LIBOR)
yield curve adjusted by a factor which reflects the credit and interest rate
risk inherent in the loan. Variable-rate loans reprice with changes in market
rates. As such their carrying amounts are deemed to approximate fair value.
The fair value of the allowance for loan losses of $80,481,000 and $76,803,000
at December 31, 1997 and 1996, respectively, are the present value of
estimated net charge-offs.

F-33
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FINANCIAL LIABILITIES--The estimated fair value of demand and savings
deposits, securities sold not yet purchased, and federal funds purchased and
security repurchase agreements approximates the carrying value. The fair value
of time and foreign deposits is estimated by discounting future cash flows
using the LIBOR yield curve. Substantially all FHLB advances reprice with
changes in market interest rates or have short terms to maturity. The carrying
value of such indebtedness is deemed to approximate market value. Other
borrowings are not significant. The estimated fair value of the subordinated
notes is based on a quoted market price. The remaining long-term debt is not
significant.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS--The fair value of the caps, floors
and swaps reflects the estimated amounts that the Company would receive or pay
to terminate the contracts at the reporting date based upon pricing or
valuation models applied to current market information, thereby taking into
account the current unrealized gains or losses of open contracts. The carrying
amounts include unamortized fees paid or received and deferred gains or
losses.

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

20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Financial information by quarter for the three years ended December 31,
1997, is as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
DILUTED
NET
INCOME INCOME
NET PROVISION BEFORE PER
INTEREST FOR LOAN INCOME NET COMMON
INCOME LOSSES TAXES INCOME SHARE
--------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
1997:
First quarter................... $ 76,343 $1,605 $ 44,356 $28,913 $0.45
Second quarter.................. 85,751 1,435 47,468 30,561 0.47
Third quarter................... 92,053 1,710 48,348 31,533 0.48
Fourth quarter.................. 97,652 1,425 47,401 31,355 0.48
--------- ------ -------- -------- -----
$ 351,799 $6,175 $187,573 $122,362 $1.89
========= ====== ======== ======== =====
1996:
First quarter................... $ 66,140 $ 700 $ 37,889 $ 24,940 $0.39
Second quarter.................. 70,271 960 40,025 26,376 0.41
Third quarter................... 73,283 1,330 42,059 27,333 0.43
Fourth quarter.................. 79,472 1,650 43,551 28,774 0.45
--------- ------ -------- -------- -----
$ 289,166 $4,640 $163,524 $107,423 $1.68
========= ====== ======== ======== =====
1995:
First quarter................... $ 53,201 $ 600 $ 23,824 $ 16,001 $0.27
Second quarter.................. 55,897 850 31,270 20,521 0.35
Third quarter................... 57,923 800 34,044 22,291 0.38
Fourth quarter.................. 66,526 750 35,034 23,572 0.37
--------- ------ -------- -------- -----
$ 233,547 $3,000 $124,172 $ 82,385 $1.37
========= ====== ======== ======== =====
</TABLE>

F-34
<PAGE>

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

21. PARENT COMPANY FINANCIAL INFORMATION

Condensed financial information of Zions Bancorporation (parent only)
follows:

ZIONS BANCORPORATION

CONDENSED BALANCE SHEETS

DECEMBER 31, 1997 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
ASSETS
------
Cash and due from banks..................................... $ 938 $ 1,932
Interest-bearing deposits................................... 2,241 3,528
Investment securities....................................... 10,494 4,952
Loans, lease financing, and other receivables............... 1,420 55
Investments in subsidiaries:
Commercial banks and bank holding company................. 787,359 597,932
Other..................................................... 5,828 6,191
Receivables from subsidiaries:
Commercial banks.......................................... -- 176
Other..................................................... 2,945 1,433
Real estate held for rental purposes, at cost, less
accumulated depreciation................................... 1,187 1,286
Premises and equipment, at cost, less accumulated
depreciation............................................... 212 211
Other real estate owned..................................... 13 54
Other assets................................................ 17,758 16,254
-------- --------
Total assets............................................ $830,395 $634,004
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accrued liabilities......................................... $ 23,203 $ 21,175
Borrowings less than one year............................... 44,000 --
Borrowings over one year.................................... 50,000 8,214
Subordinated debt to subsidiary............................. 7,732 --
Long-term debt.............................................. 50,000 50,005
-------- --------
Total liabilities....................................... 174,935 79,394
-------- --------
Shareholders' equity:
Common stock.............................................. 122,222 119,791
Net unrealized holding gains and losses on securities
available for sale....................................... 2,678 (1,807)
Retained earnings......................................... 530,560 436,626
-------- --------
Total shareholders' equity.............................. 655,460 554,610
-------- --------
Total liabilities and shareholders' equity.............. $830,395 $634,004
======== ========
</TABLE>

F-35
<PAGE>

ZIONS BANCORPORATION

CONDENSED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Interest income--interest and fees on loans and
securities....................................... $ 940 $ 895 $ 2,419
Interest expense--interest on borrowed funds...... 7,238 5,509 5,314
-------- -------- -------
Net interest loss............................. (6,298) (4,614) (2,895)
-------- -------- -------
Other income:
Dividends from consolidated subsidiaries:
Commercial banks.............................. 98,234 48,438 30,095
Other......................................... 500 1,000 --
Other income.................................... 5,404 4,010 3,131
-------- -------- -------
104,138 53,448 33,226
-------- -------- -------
Expenses:
Salaries and employee benefits.................. 7,768 6,472 5,262
Operating expenses.............................. 6,029 1,847 495
-------- -------- -------
13,797 8,319 5,757
-------- -------- -------
Income before income tax benefit.................. 84,043 40,515 24,574
Income tax benefit................................ (6,185) (3,110) (2,157)
-------- -------- -------
Income before equity in undistributed income of
consolidated subsidiaries........................ 90,228 43,625 26,731
-------- -------- -------
Equity in undistributed income of consolidated
subsidiaries:
Commercial banks and bank holding company....... 32,485 63,172 54,751
Other........................................... (351) 626 903
-------- -------- -------
32,134 63,798 55,654
-------- -------- -------
Net income...................................... $122,362 $107,423 $82,385
======== ======== =======
</TABLE>

F-36
<PAGE>

ZIONS BANCORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 122,362 $107,423 $ 82,385
Adjustments to reconcile net income to net
cash provided by operating activities:
Undistributed net income of consolidated
subsidiaries............................... (32,134) (63,798) (55,654)
Depreciation of premises and equipment...... 161 440 678
Amortization of intangibles................. 714 692 612
Other....................................... (5,811) 8,815 3,441
--------- -------- --------
Net cash provided by operating activities. 85,292 53,572 31,462
--------- -------- --------
Cash flows from investing activities:
Net decrease (increase) in interest-bearing
deposits..................................... 1,287 12,975 (13,677)
Collection of advances to subsidiaries........ 2,890 1,176 34,683
Advances to subsidiaries...................... (4,226) (1,921) (7,755)
Increase of investment in subsidiaries........ (31,430) (30) (386)
Purchase of other assets...................... -- (12,000) --
Other......................................... (3,376) (3,611) 3,625
--------- -------- --------
Net cash provided by (used in) investing
activities............................... (34,855) (3,411) 16,490
--------- -------- --------
Cash flows from financing activities:
Net change in borrowings under one year....... 44,000 -- (8,001)
Proceeds from borrowings over one year........ 50,000 -- --
Payments on borrowings over one year.......... (8,214) (1,429) (357)
Proceeds from issuance of long-term debt...... 7,732 -- --
Payments on long-term debt.................... (5) (4,715) (1,469)
Proceeds from issuance of common stock........ 3,168 1,178 1,291
Payments to redeem common stock............... (119,725) (21,635) (18,523)
Dividends paid................................ (28,387) (24,997) (20,554)
--------- -------- --------
Net cash used in financing activities..... (51,431) (51,598) (47,613)
--------- -------- --------
Net increase (decrease) in cash and due from
banks.......................................... (994) (1,437) 339
Cash and due from banks at beginning of year.... 1,932 3,369 3,030
--------- -------- --------
Cash and due from banks at end of year.......... $ 938 $ 1,932 $ 3,369
========= ======== ========
</TABLE>

The parent company paid interest of $6,179,000, $5,282,000 and $5,797,000
for the years ended December 31, 1997, 1996 and 1995, respectively.

F-37
<PAGE>

ZIONS BANCORPORATION

CONDENSED STATEMENTS OF RETAINED EARNINGS

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year...................... $436,626 $354,236 $292,443
Net income........................................ 122,362 107,423 82,385
Cash dividends:
Preferred, paid by subsidiaries to minority
shareholders................................... (41) (36) (38)
Common, per share of $0.4700 in 1997, $0.4250 in
1996, and $0.3525 in 1995...................... (28,387) (24,997) (20,554)
-------- -------- --------
Balance at end of year............................ $530,560 $436,626 $354,236
======== ======== ========
</TABLE>

F-38
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each
of such Underwriters, for whom Goldman, Sachs & Co. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are acting as representatives, has severally
agreed to purchase from the Company, the respective number of shares of Common
Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
----------- ------------
<S> <C>
Goldman, Sachs & Co............................................. 837,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................... 837,500
Bear, Stearns & Co. Inc. ....................................... 55,000
BT Alex. Brown Incorporated..................................... 55,000
Credit Lyonnais Securities (USA) Inc. .......................... 55,000
Credit Suisse First Boston Corporation.......................... 55,000
Dain Rauscher Wessels........................................... 30,000
Donaldson, Lufkin & Jenrette Securities Corporation............. 55,000
EVEREN Securities, Inc. ........................................ 55,000
Fox-Pitt, Kelton Inc. .......................................... 30,000
Keefe, Bruyette & Woods, Inc. .................................. 55,000
Lehman Brothers Inc. ........................................... 55,000
Piper Jaffray Inc. ............................................. 30,000
Smith Barney Inc. .............................................. 55,000
UBS Securities LLC.............................................. 55,000
Van Kasper & Company............................................ 30,000
Wasserstein Perella Securities, Inc. ........................... 55,000
---------
Total......................................................... 2,400,000
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at
such prices less a concession of $1.179 per share. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $0.10 per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 360,000
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 2,400,000 shares of Common
Stock offered.

The Company and certain shareholders of the Company have agreed, subject to
certain exceptions, that, during the period beginning from the date of this
Prospectus and continuing to and including the date 90 days after the date of
the Prospectus, they will not offer, sell, contract to sell or otherwise
dispose of any securities of the Company (other than, with respect to the
Company, pursuant to employee stock option plans existing, or on the
conversion or exchange of convertible or

U-1
<PAGE>

exchangeable securities outstanding, on the date of this Prospectus) which are
substantially similar to the shares of Common Stock or which are convertible
into or exchangeable for securities which are substantially similar to the
shares of Common Stock without the prior written consent of the
representatives, except for the shares of Common Stock offered in connection
with the offering.

In connection with the offering, the Underwriters may purchase and sell
shares of Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Common Stock; and
syndicate short positions involve the sale by the Underwriters of a greater
number of shares than they are required to purchase from the Company in the
offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker-dealers in respect of
the shares sold in the offering for their account may be reclaimed by the
syndicate if such shares are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the shares which may be higher than the price that
might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
on the Nasdaq National Market, in the over-the-counter market or otherwise.

The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

Both Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated have provided investment banking financial advisory services to
the Company from time to time and currently act as financial advisor to The
Sumitomo Bank, Limited, which owns approximately 85% of Sumitomo, and the
Company, respectively, in connection with the Sumitomo Acquisition.

U-2
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 1
Use of Proceeds........................................................... 8
Dividends and Price Range of Common Stock................................. 8
Capitalization............................................................ 9
Unaudited Pro Forma Condensed Combined Financial Information.............. 10
Selected Consolidated Financial Data...................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Business.................................................................. 35
Management................................................................ 47
Principal Shareholders.................................................... 50
Description of Capital Stock.............................................. 51
Validity of Common Stock.................................................. 53
Experts................................................................... 54
Available Information..................................................... 54
Incorporation of Certain Information by Reference......................... 55
Index to Consolidated Financial Statements................................ F-1
Underwriting.............................................................. U-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

2,400,000 SHARES

ZIONS BANCORPORATION

COMMON STOCK
(NO PAR VALUE PER SHARE)

------------

PROSPECTUS

------------

GOLDMAN, SACHS & CO.

MERRILL LYNCH & CO.

REPRESENTATIVES OF THE UNDERWRITERS

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------