ZIONS BANCORPORATION /UT/
S-4, 1998-09-17
NATIONAL COMMERCIAL BANKS
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   As filed with the Securities and Exchange Commission on September 17, 1998
                                                           Registration No. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-4
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933

                              ZIONS BANCORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>

<S>                                     <C>                                    <C>       
             UTAH                                   6712                        87-0227400
(State or other jurisdiction of         (Primary Standard Industrial            (IRS Employer      
incorporation or organization)          Classification Code Number)             Identification No.) 
</TABLE>

                           ONE SOUTH MAIN, SUITE 1380
                           SALT LAKE CITY, UTAH 84111
                                 (801) 524-4787
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)

                               HARRIS H. SIMMONS
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                              ZIONS BANCORPORATION
                           ONE SOUTH MAIN, SUITE 1380
                           SALT LAKE CITY, UTAH 84111
                                 (801) 524-4787
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                   Copies to:

Brian D. Alprin, Esq.                        David L. Shakes, Esq.              
Laurence S. Lese, Esq.                       Hendricks, Hendricks & Shakes, P.C.
Duane, Morris & Heckscher LLP                4055 Nonchalant Circle South       
Suite 700                                    Colorado Springs, CO 80917-2948    
1667 K Street, N.W.                          (719) 596-3326                     
Washington, D.C. 20006-1608                                                     
(202) 776-7800                                         



<PAGE>


APPROXIMATE  DATE OF  COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: The date of mailing the Proxy Statement/Prospectus contained herein.

    If the  securities  being  registered  on this  form are  being  offered  in
connection  with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

    If this form is filed to  register  additional  securities  for an  offering
pursuant to Rule 462(b) under the  Securities  Act,  check the following box and
list the Securities Act registration  statement number of the earlier  effective
registration statement for the same offering. [ ]

    If this form is a  post-effective  amendment  filed  pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                              CALCULATION OF REGISTRATION FEE
=======================================================================================================
                                                    Proposed        Proposed
                             Amount to be            maximum          maximum            Amount of
Title of securities to be    registered        offering price per    aggregate       registration fee
       registered                                    share         offering price(1)
- -------------------------------------------------------------------------------------------------------
<S>                          <C>                     <C>           <C>                    <C>   
 Common Stock, no par value  608,000 Shares           NA           $8,384,000             $2,474
=======================================================================================================
</TABLE>


(1)  Estimated  solely  for  the  purpose  of  calculating  registration  fee in
     accordance with Rule 457(f)(2) based upon the book value of the outstanding
     shares of Common Stock,  $20.00 par value,  of Mountain  Financial  Holding
     Company on June 30, 1998 (the latest  practicable  date prior to filing the
     registration  statement)  of  $8,384,000,  such stock to be  canceled  upon
     effectiveness   of   the    Reorganization    described   in   this   Proxy
     Statement/Prospectus.

     THE REGISTRANT  HEREBY AMENDS THIS  REGISTRATION  STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER  AMENDMENT  WHICH  SPECIFICALLY  STATES  THAT  THIS  REGISTRATION
STATEMENT SHALL  THEREAFTER  BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE  SECURITIES  ACT OF 1933 OR UNTIL THE  REGISTRATION  STATEMENT  SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE  COMMISSION,  ACTING UNDER
SECTION 8(A), MAY DETERMINE.

================================================================================
<PAGE>



                       MOUNTAIN FINANCIAL HOLDING COMPANY
                                 PROXY STATEMENT
                                       FOR
                         SPECIAL MEETING OF SHAREHOLDERS
                           TO BE HELD ON _______ ,1998

                                      AND

                              ZIONS BANCORPORATION
                                   PROSPECTUS
                            Up to 608,000 SHARES OF
                                  COMMON STOCK

    Mountain  Financial Holding Company (the "Company") is furnishing this Proxy
Statement/Prospectus  to its  shareholders in connection  with the  solicitation
&proxies by its Board of Directors for use at a special  meeting of shareholders
of the Company  which will be held at 9:00 a.m.,  local time, on ,1998 at 361 W.
Highway  24,  Woodland  Park,  Colorado  (the  "Special  Meeting")  and  at  any
adjournments  or  postponements  of the Special  Meeting,  The Company has first
mailed  this  Proxy  Statement/Prospectus  and  accompanying  notice of  special
meeting and form of proxy ("Proxy") on or about ,1998 to the shareholders of the
Company of record as of                 ,1998 (the "Record Date").

    At the Special  Meeting,  the  holders of Company  common  stock,  par value
$20.00 per share (the  "Company  Common  Stock")  will  consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization, dated as
of May 14,  1998,  among the Company,  the  Company's  wholly-owned  subsidiary,
Mountain  National Bank (the "Bank"),  Zions  Bancorporation  ("Zions"),  Zions'
wholly-owned subsidiary, Val Cor Bancorporation, Inc. ("Val Cor"), and Val Cor's
wholly-owned   subsidiary,    Vectra   Bank   Colorado,   National   Association
(successor-in-interest to Bank Colorado,  National Association) ("Vectra Bank"),
an  Agreement  of Merger  between the Company  and Val Cor and an  Agreement  of
Merger   between   the  Bank  and  Vectra  Bank   (collectively   the  "Plan  of
Reorganization").   If  the   Company's   shareholders   approve   the  Plan  of
Reorganization and all other conditions are met, the Company will merge with and
into Val Cor, with Val Cor being the surviving corporation (the "Holding Company
Merger")  and the Bank will merge with and into  Vectra  Bank,  with Vectra Bank
being  the  surviving   national   banking   association   (the  "Bank  Merger";
collectively  the Holding  Company Merger and the Bank Merger are referred to as
the "Reorganization").

     Upon consummation of the Reorganization,  Zions will issue up to a total of
608,000  shares of its common stock,  no par value ("Zions Common Stock") to the
Company's shareholders. At the Effective Date of the Reorganization,  the shares
of Company  Common Stock will be canceled  and  immediately  converted  into the
right for Company shareholders to receive 12.16 shares of Zions Common Stock for
each share of Company  Common Stock that they own or an equivalent  market value
of  approximately  $________ per share of Company Common Stock, if the Effective
Date were on ____________________,1998,  when the closing price for Zions Common
Stock was $___________ .

     FOR THE ACTION OF THE  SHAREHOLDERS TO BE EFFECTIVE,  HOLDERS OF TWO-THIRDS
OF THE ISSUED AND OUTSTANDING  SHARES OF COMPANY COMMON STOCK MUST VOTE IN FAVOR
OF THE PLAN OF  REORGANIZATION.  THE REQUISITE  REGULATORY  APPROVALS  HAVE BEEN
OBTAINED.

     NEITHER THE  SECURITIES AND EXCHANGE  COMMISSION  NOR ANY STATE  SECURITIES
COMMISSION  HAS APPROVED OR  DISAPPROVED  THE SHARES OF ZIONS COMMON STOCK TO BE
ISSUED IN THE REORGANIZATION OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

     THE SHARES OF ZIONS COMMON STOCK OFFERED  HEREBY ARE NOT SAVINGS  ACCOUNTS,
DEPOSITS  OR OTHER  OBLIGATIONS  OF A BANK OR  SAVINGS  ASSOCIATION  AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE  CORPORATION OR ANY OTHER  GOVERNMENTAL
AGENCY.

             The date of this Proxy Statement/Prospectus is       , 1998.


<PAGE>



                               TABLE OF CONTENTS

                                                                            Page

SUMMARY ......................................................................1

CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION .................12

WHERE YOU CAN FIND MORE INFORMATION .........................................13

ZIONS DOCUMENTS INCORPORATED BY REFERENCE ...................................14

THE SPECIAL MEETING .........................................................15
    Date, Time, and Place ...................................................15
    Matters to be Considered at the Special Meeting .........................15
    Record Date; Voting Rights ..............................................15
    Quorum; Vote Required for Approval ......................................16
    Voting and Revocation of Proxies ........................................16
    Solicitation of Proxies .................................................16
    Security Ownership by Certain Beneficial Owners and Management ..........17

PLAN OF REORGANIZATION ......................................................17
    The Reorganization ......................................................17
    Background of and Reasons for the Reorganization ........................18
    Voting Agreements .......................................................20
    Required Vote; Management Recommendation ................................21
    No Opinion of a Financial Advisor .......................................21
    Conversion of Company Shares ............................................22
    Federal Income Tax Consequences of the Reorganization ...................23
    Rights of Dissenting Shareholders .......................................24
    Interests of Certain Persons in the Transaction .........................26
    Inconsistent Activities .................................................27
    Conduct of Business Pending the Reorganization ..........................28
    Conditions to the Reorganization ........................................29
    Representations and Warranties ..........................................31
    Amendment and Waiver ....................................................31
    Authorized Termination and Damages for Breach ...........................31
    Restrictions on Resales by Company Affiliates ...........................32
    Expenses ................................................................33
    Government Approvals ....................................................33
    Effective Date of the Reorganization ....................................33
    Accounting Treatment ....................................................33
    Relationship Between Zions and the Company ..............................34
                                                                        
                                        i
<PAGE>



SUPERVISION AND REGULATION ..................................................34
    Zions ...................................................................34
    Regulatory Capital Requirements .........................................35
    Other Regulatory and Supervisory Issues .................................39
    Deposit Insurance and Other Assessments .................................40
    Interstate Banking ......................................................41

MONETARY POLICY .............................................................42

INFORMATION CONCERNING ZIONS BANCORPORATION .................................42
    Selected Financial Data .................................................42
    Stock Prices and Dividends on Zions Common Stock ........................45

INFORMATION CONCERNING THE COMPANY AND THE BANK .............................46
    General .................................................................46
    Business ................................................................46
    Investment Securities ...................................................51
    Competition .............................................................56
    The Bank's Facilities ...................................................56
    Legal Proceedings .......................................................57
    Employees ...............................................................57
    Regulatory Matters ......................................................57
    Selected Financial Data .................................................57
    Stock Prices and Dividends on Company Common Stock ......................59
    Information Concerning the Chairman and Chief Executive Officer of the
         Company and the Bank ...............................................59
    Certain Transactions of the Company .....................................60
    Stockholdings of Directors, Officers and Certain Others .................60

MANAGEMENT'S DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
    MOUNTAIN FINANCIAL HOLDING COMPANY ......................................62
    General .................................................................62
    Net Interest Income .....................................................62
    Results of Operations ...................................................65
    Liquidity and Sources of Funds ..........................................65
    Capital Resources .......................................................66
    Effects of Inflation and Changing Prices ................................66

COMPARISON OF THE RIGHTS OF SHAREHOLDERS
    OF ZIONS AND THE COMPANY ................................................66
    General .................................................................66
    Authorized Capital ......................................................66

                                       ii


<PAGE>


    Anti-Takeover Matters ...................................................67
    Shareholder Rights Plan .................................................68
    Board of Directors ......................................................69
    Special Shareholders' Meetings ..........................................71
    Amendment of Articles and Bylaws ........................................71
    Dissenters' Rights ......................................................71
    Preemptive Rights .......................................................72
    Dividend Rights .........................................................72
    Liquidation Rights ......................................................73
    Miscellaneous ...........................................................73
    
LEGAL OPINIONS ..............................................................73

EXPERTS .....................................................................74

OTHER MATTERS ...............................................................74

FINANCIAL STATEMENTS OF MOUNTAIN FINANCIAL HOLDING COMPANY ..................F-1

Appendix A - Agreement and Plan of Reorganization

Appendix B - Rights of Dissenters  under ss.ss.  7-113-101 to 701-113-302 of 
             the Colorado Business Corporation Act

                                      iii


<PAGE>



                                    SUMMARY

    This   summary   highlights    selected    information   from   this   Proxy
Statement/Prospectus  and  may  not  contain  all of  the  information  that  is
important to you. To understand the Reorganization fully and for a more complete
description of the legal terms of the Reorganization,  you should read carefully
this  entire  document,  including  the  Appendices  and the  documents  we have
referred you to. A copy of the Plan of  Reorganization is attached as Appendix A
to this Proxy Statement/Prospectus. See "Where You Can Find More Information."

THE PARTIES

    Zions  Bancorporation  ("Zions") is a multi-bank  holding company registered
under the Bank  Holding  Company  Act of 1956,  as amended  (the  "Bank  Holding
Company Act"),  and organized under the laws of Utah,  engaged  primarily in the
commercial  banking  business  through  its banking  subsidiaries.  Zions is the
second  largest bank  holding  company  headquartered  in Utah.  In 1997,  Zions
achieved a  significant  expansion of  commercial  banking  operations  in Utah,
Nevada, and Arizona,  and expanded its franchise by adding banking operations in
Colorado,  New Mexico,  Idaho and  California.  Its principal  subsidiaries  are
banking subsidiaries which include Zions First National Bank, the second largest
commercial  banking  organization in Utah;  Nevada State Bank, the fifth largest
commercial  bank in Nevada;  and  National  Bank of Arizona,  the fifth  largest
commercial  bank  in  Arizona.  Additionally,   Zions  has  significant  banking
operations in Colorado through its subsidiaries,  Val Cor Bancorporation,  Inc.,
which   operates   through  its  subsidiary   Vectra  Bank  Colorado,   National
Association,  the fifth largest commercial bank in Colorado,  Pitkin County Bank
and Trust Co., and Centennial  Savings Bank,  F.S.B.;  and in California through
its subsidiary  Grossmont Bank.  Upon  completion of the pending  acquisition of
Sumitomo Bank of  California,  these two  California  banks will combine to form
California  Bank and Trust,  which will be the fifth largest  commercial bank in
California.  See "Recent Developments" below. Acquisitions during 1997 consisted
of Aspen  Bancshares  and its affiliate  banks with branches in Colorado and New
Mexico;  Tri-State  Bank in Idaho,  which was merged into Zions  First  National
Bank; 31 Wells Fargo branches in Utah, Idaho, Arizona and Nevada; Sun State Bank
in Nevada which was merged into Nevada State Bank;  Grossmont Bank in San Diego,
California;  and the public  finance firms of Howarth & Associates in Nevada and
Kelling,  Northcross and Nobriga, Inc. in California;  and during 1998 consisted
of Vectra Banking Corporation and its banking  subsidiary,  Vectra Bank, located
in Denver, Colorado; Sky Valley Bank Corp. and its banking subsidiary, The First
National  Bank in  Alamosa,  with  offices  in  Alamosa,  Center  and  Saguache,
Colorado;  Tri-State Finance Corporation and its banking  subsidiary,  Tri-State
Bank, with offices in Denver; FP Bancorp, Inc. and its banking subsidiary, First
Pacific  National Bank, with eight offices in San Diego and Riverside  Counties,
California;  SBT  Bankshares,  Inc. and its banking  subsidiary,  State Bank and
Trust of Colorado  Springs,  with offices in Colorado Springs,  Colorado;  Routt
County National Bank Corporation and its banking subsidiary, First National Bank
of Colorado, with offices in Steamboat Springs, Colorado; Kersey Bancorp and its
banking  subsidiary,  Independent  Bank,  with  seven  offices  in  northeastern
Colorado; Eagle Holding Company and its banking subsidiary, Eagle Bank, with one
office in Boulder  County,  Colorado;  and The Commerce  Bancorporation  and its
banking subsidiary, The Commerce Bank of Washington,


<PAGE>



National  Association,  with one office in Seattle,  Washington.  As of June 30,
1998,  Zions had total  consolidated  assets of $11.8 billion,  deposits of $8.3
billion, and shareholders'  equity of $925 million. See "Information  Concerning
Zions Bancorporation." Zions' principal executive offices are at One South Main,
Suite 1380, Salt Lake City, Utah 84111 (telephone: 801/524-4787).

    Val Cor Bancorporation,  Inc. ("Val Cor"), a Colorado corporation, is a bank
holding  company  registered  under the Bank Holding Company Act. Zions acquired
Val Cor in May 1997.  Val Cor's  principal  asset consists of its 100% ownership
interest in Vectra Bank Colorado, National Association.

    Vectra Bank Colorado,  National  Association  ("Vectra  Bank") is a national
banking  association  with its  offices in  Denver,  Adams,  Alamosa,  Arapahoe,
Boulder, Douglas, E1 Paso, Jefferson,  Larimer, Logan, Montezuma, Morgan, Routt,
Saguache,  and Weld Counties,  Colorado.  Vectra Bank offers traditional banking
services through its offices in the above-referenced counties. At June 30, 1998,
Vectra  Bank had total  assets  of  $1,183  million,  total  deposits  of $1,017
million,  total loans of $723 million, and shareholders' equity of $119 million.
Vectra  Bank's main office is located at 1650 South  Colorado  Boulevard,  Suite
320, Denver, Colorado 80222, and its telephone number is 303/782-7440.

    Mountain Financial Holding Company (the "Company"),  a Colorado corporation,
is a bank holding  company  registered  under the Bank Holding Company Act whose
sole  activity is the  ownership  and  operation of Mountain  National Bank (the
"Bank").  The Company has one other wholly-owned  subsidiary,  Mountain National
Bank Service  Company,  which will be dissolved prior to the Effective Date. The
Company's  principal asset consists of its 100% ownership  interest in the Bank.
The  Company's  main  office is located at 361 W.  Highway  24,  Woodland  Park,
Colorado  80866-9039 and its telephone  number is  719/687-3012.  As of June 30,
1998,  the  Company  had  total   consolidated   assets  of  $90.8  million  and
shareholders' equity of $8.4 million.

    Mountain  National  Bank (the  "Bank")  is a  national  banking  association
organized  under the laws of the United  States.  The Bank has  operated  at its
current location in Woodland Park,  Colorado since 1982. In addition to its main
location  in  Woodland  Park,  the Bank has a branch  office  located in Cripple
Creek,  Colorado.  At June 30, 1998, the Bank had total assets of $90.8 million,
total deposits of $81.8 million, total loans of $54.3 million, and shareholders'
equity of $8.4 million.  The Bank's main office is located at 361 W. Highway 24,
Woodland Park, Colorado 80866-9039, and its telephone number is 719/687-3012.

THE SPECIAL MEETING; PURPOSE

    The Special Meeting of  Shareholders of the Company (the "Special  Meeting")
will be held at 9:00 a.m.,  local time, on ,1998 at 361 W. Highway 24,  Woodland
Park, Colorado.  The purpose of the Special Meeting is to consider and vote upon
a proposal to approve  the Plan of  Reorganization  and to  transact  such other
business as may properly come

                                        2



<PAGE>



before the Special Meeting. See "The Special Meeting -- Matters to be Considered
at the Special Meeting."

RECORD DATE; VOTING RIGHTS

    The Record Date for determining the  shareholders of the Company entitled to
notice  of  and  to  vote  at  the  Special  Meeting  or  any  postponements  or
adjournments  of the Special  Meeting is the close of  business  on ,1998.  Each
outstanding  share of Company  Common Stock entitles its holder of record on the
Record Date to one vote on each matter  properly  submitted to the  shareholders
for action at the Special Meeting. See "Plan of Reorganization -- Required Vote;
Management Recommendation."

VOTE REQUIRED FOR APPROVAL

    Approval of the Plan of  Reorganization  requires  the  affirmative  vote of
two-thirds of the outstanding shares of Company Common Stock entitled to vote at
the Special Meeting.  See "Plan of Reorganization  -- Required Vote;  Management
Recommendation."

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND Management

    As of June 30,  1998,  all  directors  and a  principal  shareholder  of the
Company who  beneficially  owned 46,454 shares,  or  approximately  92.9% of the
outstanding  shares,  of Company  Common Stock have agreed with Zions,  in their
capacity  as  shareholders,  to  vote  their  shares  in  favor  of the  Plan of
Reorganization.  Such  a  vote  will  be  sufficient  to  approve  the  Plan  of
Reorganization.  If these shareholders vote their shares in favor of the Plan of
Reorganization  as they have agreed,  approval of the Plan of  Reorganization is
assured. See "Plan of Reorganization -- Security Ownership by Certain Beneficial
Owners and Management" and "Voting Agreements."

PROPOSED REORGANIZATION

    At the Special  Meeting,  the Company will ask its  shareholders to consider
and approve the Plan of  Reorganization,  which  provides  for the merger of the
Company into Val Cor, whereby Val Cor will be the surviving corporation, and for
the merger of the Bank into Vectra  Bank,  with Vectra Bank being the  surviving
national  banking  association.  See  "Plan of  Reorganization"  and the Plan of
Reorganization attached to this Proxy Statement/Prospectus as Appendix A.

REORGANIZATION CONSIDERATION

    Upon consummation of the  Reorganization,  Zions will issue up to a total of
608,000  shares  of its  Common  Stock  to the  Company's  shareholders.  At the
Effective Date (as defined) of the Reorganization,  the shares of Company Common
Stock will be  canceled  and  immediately  converted  into the right for Company
shareholders to receive 12.16 shares of Zions Common

                                       3


<PAGE>



Stock for each share of Company Common Stock that they own. Zions will not issue
fractional  shares  of its  common  stock in the  Reorganization.  See  "Plan of
Reorganization."

    On ,1998,  the closing  price of Zions Common  Stock on the Nasdaq  National
Market  ("Nasdaq NMS") was $____ per share.  On that date the Company had 50,000
shares  of  its  Common  Stock  issued  and   outstanding.   Assuming  that  the
Reorganization  had been consummated on that date,  Company  shareholders  under
such  circumstances  would have been  entitled to receive  12.16 shares of Zions
Common  Stock for each  share of  Company  Common  Stock  that  they own,  or an
equivalent market value of approximately $ per share of Company Common Stock.

BOARD OF DIRECTORS RECOMMENDATION

    The  Board  of  Directors  of the  Company  unanimously  believes  that  the
Reorganization is in the best interests of the Company,  its  shareholders,  and
the employees and customers of the Bank, and recommends that the shareholders of
the  Company  vote "FOR"  approval of the Plan of  Reorganization.  See "Plan of
Reorganization -- Background of and Reasons for the Reorganization."

    Shareholders  of the Company are requested to complete,  date,  and sign the
accompanying  proxy card and return it  promptly  in the  enclosed  postage-paid
envelope.

REASONS FOR THE REORGANIZATION

    Management  and the Board of Directors of the Company  believe that it is in
the best interests of the Company and its  shareholders for the Company to merge
with Zions. In considering the Plan of Reorganization, the Board determined that
the Zions offer  would  maximize  value for the  Company's  shareholders,  while
providing a  favorable  structure  for the  transaction  in which the  Company's
shareholders will receive liquid securities without  recognizing taxable gain or
loss upon the receipt of such  securities  (except  for gain or loss  recognized
with respect to any cash  received in the  Reorganization  in lieu of fractional
shares).  Further,  the Board  believes that the  Reorganization  will result in
positive effects for the employees of the Company and the Bank, the customers of
the  Bank,  and the  communities  in  which  the  Bank  operates.  See  "Plan of
Reorganization  --  Background  of and  Reasons  for the  Reorganization"  for a
description  of the factors  considered by the  Company's  Board of Directors in
determining   to  recommend  the  Plan  of   Reorganization   to  the  Company's
shareholders for their approval.

    For Zions, the Reorganization will provide an opportunity to further broaden
its franchise in Colorado  through its expansion  into the mountain area west of
Colorado  Springs.  The  combination  of the  different  skills,  resources  and
services offered by the Company and Zions,  together with the additional  skills
and  resources  available  in the  broader  Zions  organization,  will  make the
resulting  banking  group able to compete more  effectively  in its markets with
other

                                        4


<PAGE>



full-service financial  institutions.  See "Plan of Reorganization -- Background
of and Reasons for the Reorganization."

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION

    The Plan of  Reorganization  provides  that,  following the  Reorganization,
James P. Oaks,  currently  president and chief executive  officer of the Company
and Bank, and Charles A. Oaks,  currently  executive vice president of the Bank,
will both become executive officers of Vectra Bank. The Messrs.  Oaks will enter
into employment  agreements with Vectra Bank effective as of the Effective Date.
The Plan of Reorganization  further provides that, following the Reorganization,
Dale L.  Duncan,  currently  chairman  of the board and a  director  of both the
Company and the Bank and a principal shareholder of the Company, will enter into
a non-competition agreement with Vectra Bank effective as of the Effective Date.
The Plan of  Reorganization  limits the  payment by the  Company and the Bank of
aggregate  bonuses in 1998 to 4.5% in excess of the  bonuses  paid in 1997.  The
Company and the Bank will pay bonuses earned during 1998 to various  officers of
the Company and the Bank including the Messrs. Oaks at closing.  Vectra Bank has
agreed to assume the obligations of the Bank under the Executive Employee Salary
Continuation  Agreements  with the Messrs.  Oaks.  The Board of Directors of the
Company was aware of these interests when it considered and approved the Plan of
Reorganization.  See "Plan of  Reorganization -- Interests of Certain Persons in
the Transaction."

TAX CONSEQUENCES

    The parties to the  Reorganization  intend that the  Reorganization  will be
treated  for federal  income tax  purposes  as a tax-free  reorganization.  In a
tax-free Reorganization, the Company shareholders will recognize no gain or loss
upon the exchange of their shares of Company Common Stock for Zions Common Stock
(except with respect to cash received by such shareholders in lieu of fractional
shares).  See "Plan of  Reorganization -- Federal Income Tax Consequences of the
Reorganization."

DISSENTERS' RIGHTS

    Under Colorado law, shareholders of the Company are entitled to dissent from
the  Reorganization  and to receive cash equal to the fair value for such shares
in accordance  with  procedures  established by Colorado law. Since exercise and
preservation of dissenters'  rights are conditioned on strict  observance of the
applicable  sections of Colorado  law, each Company  shareholder  who chooses to
exercise  dissenters'  rights should consult and strictly observe the procedures
set forth in the  statute,  a copy of which is  attached  as  Appendix B to this
Proxy Statement/Prospectus. Failure to follow the statutory provisions precisely
may result in loss of such shareholder's  dissenters' rights under Colorado law.
See "Plan of Reorganization -- Rights of Dissenting Shareholders" and Appendix B
to this Proxy Statement/Prospectus.


                                       5


<PAGE>



CONDITIONS TO THE REORGANIZATION; REGULATORY APPROVAL

    Consummation  of  the  Reorganization  is  subject  to  various  conditions,
including (i) obtaining requisite approval from the Company  shareholders,  (ii)
obtaining  regulatory  approvals  or waivers  from the Board of Governors of the
Federal Reserve System,  the  Comptroller of the Currency,  the  Commissioner of
Financial  Institutions  of Utah, and the Colorado  State Banking  Board,  (iii)
receiving  an opinion  of counsel  with  respect to certain  tax  aspects of the
Reorganization,  (iv) the absence of any material adverse change with respect to
the  operations  and financial  condition of the Company or the Bank, (v) Zions'
receiving  an opinion  that the  Reorganization  will be treated for  accounting
purposes as a pooling of interests, and (vi) the satisfaction of other customary
closing  conditions.  The  requisite  regulatory  approvals or waivers have been
obtained.  See "Plan of Reorganization -- Conditions to the Reorganization" and"
- -- Government Approvals."

EFFECTIVE DATE OF THE REORGANIZATION

    If the shareholders of the Company approve the Plan of  Reorganization,  the
parties  expect  that the  Reorganization  will become  effective  in the fourth
quarter  of  1998.  However,  there  can be no  assurance  that  all  conditions
necessary to the  consummation  of the  Reorganization  will be satisfied or, if
satisfied,  that they will be satisfied in time to permit the  Reorganization to
become effective at the anticipated time. See "Plan of Reorganization--Effective
Date of the Reorganization."

ACCOUNTING TREATMENT

    The parties expect the Reorganization to qualify as a "pooling of interests"
in accordance with Accounting  Principles Board Opinion No. 16, which means that
the companies will be treated for accounting purposes as if they had always been
combined.  Receipt of an  officers'  certificate  from the  president  and chief
executive  officer  and chief  financial  officer of each of the Company and the
Bank  regarding  pooling  matters  and  receipt by Zions of an opinion  that the
Reorganization  should be treated as a pooling of interests  are  conditions  of
closing  of the  Reorganization.  See  "Plan  of  Reorganization  --  Accounting
Treatment."

SELECTED FINANCIAL INFORMATION

    The  following  table  provides  certain  unaudited   historical   financial
information  for  Zions  and the  Company.  This  information  is  based  on the
respective  historical  financial statements of Zions incorporated in this Proxy
Statement/Prospectus  by reference and of the Company which are included in this
Proxy  Statement/Prospectus.   Shareholders  of  the  Company  should  read  the
financial  statements  and the  related  notes  with  respect  to Zions  and the
Company.  With respect to pro forma  combined  financial  information  for Zions
giving  effect to the  Reorganization  using the pooling of interests  method of
accounting, see "Comparative Per Share Data," below.

                                       6

<PAGE>
<TABLE>
<CAPTION>
                                            SIX MONTHS ENDED
                                                JUNE 30,
                                     ------------------------------
                                           1998           1997
                                     --------------- --------------
                                     (IN THOUSANDS, EXCEPT PER SHARE
                                                AMOUNTS)
<S>                                  <C>             <C>
ZIONS
Earnings
 Net interest income ...............   $   231,341     $  185,243
 Provision for loan losses .........         6,741          3,710
 Net income ........................        75,157         64,836
Per Share
 Net income (basic) ................   $      1.04     $     0.94
 Net income (diluted) ..............          1.03           0.91
 Cash Dividends ....................          0.26           0.23
Statement of Condition at Period End
 Assets ............................   $11,780,537     $9,696,279
 Deposits ..........................     8,312,094      6,529,716
 Long-term debt ....................       386,243        263,246
 Shareholders' equity ..............       924,645        704,498
MOUNTAIN
 Earnings
 Net interest income ...............   $     2,326     $    2,138
 Provision for loan losses .........            20             90
 Net income ........................         1,417          1,143
Per Share
 Net income (basic) ................   $     28.34     $    22.86
 Net income (diluted) ..............         28.34          22.86
 Cash Dividends ....................         20.40          14.00
Statement of Condition at Period End
 Assets ............................   $    90,787     $   77,568
 Deposits ..........................        81,792         68,931
 Long-term debt ....................            --             --
 Shareholders' equity ..............         8,384          7,084
 



<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                     -------------------------------------------------------------------------
                                          1997           1996           1995           1994           1993
                                     -------------- -------------- -------------- -------------- -------------
                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                  <C>            <C>            <C>            <C>            <C>
ZIONS
Earnings
 Net interest income ...............   $  351,799     $  289,166     $  233,547     $  198,606    $  174,657
 Provision for loan losses .........        6,175          4,640          3,000          2,181         2,993
 Net income ........................      122,362        107,423         82,385         63,827        58,205
Per Share
 Net income (basic) ................   $     1.92     $    1.70      $   1.39       $     1.11    $    1.03
 Net income (diluted) ..............         1.89          1.68          1.37             1.09         1.02
 Cash Dividends ....................         0.47          0.425          0.3525          0.29         0.245
Statement of Condition at Period End
 Assets ............................   $9,521,770     $7,116,413     $6,095,515     $4,934,095    $4,801,054
 Deposits ..........................    6,854,462      5,119,692      4,511,184      3,705,976     3,432,289
 Long-term debt ....................      258,566        251,620         56,229         58,182        59,587
 Shareholders' equity ..............      655,460        554,610        469,678        365,770       312,592
MOUNTAIN
 Earnings
 Net interest income ...............   $    4,408     $    3,710     $    3.075     $    2,572    $    2,212
 Provision for loan losses .........          180            193             60             13            25
 Net income ........................        2,338          1,350          1,152            877           729
Per Share
 Net income (basic) ................   $    46.76     $   27.00      $   23.04      $    17.54    $   14.58
 Net income (diluted) ..............        46.76         27.00          23.04           17.54        14.58
 Cash Dividends ....................        21.44             --             --             --            --
Statement of Condition at Period End
 Assets ............................   $   85,336     $   74,732     $   62,634     $   55,966    $   47,566
 Deposits ..........................       76,644         67,499         56,373         47,431        43,912
 Long-term debt ....................           --             --              3              6             9
 Shareholders' equity ..............        7,971          6,605          5,291          4,023         3,184
 
</TABLE>

                                       7
<PAGE>

COMPARATIVE PER SHARE DATA

     The  following  unaudited pro forma combined financial information reflects
the  application  of the pooling of interests method of accounting. Shareholders
of  the  Company  should  read  the  following  tables  in  conjunction with the
financial    information    of    Zions    as   incorporated   in   this   Proxy
Statement/Prospectus  by  reference  to  other  documents  and of the Company as
included  in  this  Proxy  Statement/Prospectus.  The  tables  show  comparative
historical  per  common share data for Zions and the Company (separately and pro
forma  combined)  and  equivalent  pro forma per share data for the Company. The
following  historical  data  are  based  on  the respective historical financial
statements   of   Zions  incorporated  in  this  Proxy  Statement/Prospectus  by
reference  and  of  the  Company included in this Proxy Statement/Prospectus and
should   be  read  in  conjunction  with  such  financial  statements  and  such
information  and  the  related  notes  to each. The pro forma data in the table,
presented  as  of  and  for  each  of  the  years in the three year period ended
December  31,  1997,  and  as of and for the six months ended June 30, 1998, are
presented  for  comparative  and  illustrative purposes only. These data are not
necessarily  indicative  of  the  combined  financial  position  or  results  of
operations  in  the future or what the combined financial position or results of
operations  would  have  been had the Reorganization been consummated during the
period or as of the date for which the information in the table is presented.





<TABLE>
<CAPTION>
                                        HISTORICAL                      PRO FORMA
                               ----------------------------   -----------------------------
                                                                ZIONS AND       ZIONS AND
                                                                 MOUNTAIN        MOUNTAIN
                                                                PRO FORMA       EQUIVALENT
PER COMMON SHARE                  ZIONS         MOUNTAIN       COMBINED(4)     PRO FORMA(5)
- ----------------------------   ----------   ---------------   -------------   -------------
<S>                            <C>          <C>               <C>             <C>
NET INCOME (DILUTED)(1)
For the six months ended:
 June 30, 1998 .............   $  1.03      $  18.96(4)       $  1.03         $  12.52
For the year ended:
 December 31, 1997 .........   $  1.89      $  30.70(4)       $  1.90         $  23.10
 December 31, 1996 .........      1.68         27.00             1.69            20.55
 December 31, 1995 .........      1.37         23.04             1.38            16.78
CASH DIVIDENDS(2)
For the six months ended:
 June 30, 1998 .............   $  0.26      $  20.40          $  0.26         $   3.16
For the years ended:
 December 31, 1997 .........   $  0.47      $  21.44          $  0.47         $   5.72
 December 31, 1996 .........      0.425          --              0.425            5.17
 December 31, 1995 .........      0.3525         --              0.3525           4.29
BOOK VALUE(3)
 As of:
 June 30, 1998 .............   $ 12.32      $ 167.68          $ 12.33         $ 149.93
 December 31, 1997 .........     10.25        159.42            10.27           124.88
 December 31, 1996 .........      8.72        132.10             8.76           106.52
 December 31, 1995 .........      7.46        105.92             7.49            91.08
 
</TABLE>

                                       8
<PAGE>


- ----------------------
(1)  Net  income  per  share is based on  weighted  average  common  and  common
     equivalent shares outstanding.

(2)  While Zions is not obligated to pay cash dividends,  the Board of Directors
     presently  intends to continue  its policy of paying  quarterly  dividends.
     Future  dividends  will depend,  in part,  upon the earnings and  financial
     condition of Zions. Pro forma cash dividends per share represent historical
     cash dividends of Zions.

(3)  Book  value per  common  share is based on total  period-end  shareholders'
     equity.

(4)  Pro forma combined net income per share represents historical net income of
     Zions and  adjusted  historical  net income of the Company  computed  using
     historical  weighted average common and common  equivalent  shares of Zions
     adjusted  by  imputed  common and common  equivalent  shares  which will be
     issued in the  transaction.  Historical net income per share of the Company
     and pro forma net income per share for the six months  ended June 30, 1998,
     and the year ended  December 31, 1997,  reflect  income tax  adjustments of
     $496,000 and $803,000, respectively,  reducing net income to compensate for
     the Company's conversion to an S Corporation effective January 1, 1997. Pro
     forma   combined  book  value  per  share   represents   historical   total
     shareholders'  equity  of  Zions  and the  Company  computed  using  Zions'
     historical  common  shares  outstanding  adjusted by imputed  common shares
     which will be issued in the transaction.

(5)  Pro forma  equivalent  amounts are  computed by  multiplying  the pro forma
     combined amounts by the Exchange Ratio of one share of Company Common Stock
     for  12.16  shares  of  Zions  Common  Stock,  which  would  have  been the
     applicable Exchange Ratio had the Reorganization occurred on ________,1998.

    RECENT DEVELOPMENTS

     On May 26, 1998,  Zions and FP Bancorp,  Inc.  ("FP  Bancorp"),  the parent
company of First Pacific National Bank ("First Pacific") completed their merger,
whereby FP Bancorp merged with and into Zions. FP Bancorp shareholders  received
1,956,240   shares  of  Zions  Common  Stock  at  closing.   First  Pacific  had
approximately $359 million in assets in eight offices in San Diego and Riverside
Counties,  California.  On June 19,  1998,  First  Pacific  merged with and into
Grossmont  Bank,  with Grossmont being the surviving  banking  corporation.  The
merger was accounted for as a pooling of interests.

     Zions and SBT Bancshares,  Inc. ("SBT"),  the holding company of State Bank
and Trust of Colorado Springs ("SBTCS"), completed their merger on May 29, 1998.
SBT  merged  with  and  into  Val  Cor  Bancorporation,   Inc.  ("Val  Cor"),  a
wholly-owned  subsidiary of Zions in exchange for 546,403 shares of Zions Common
Stock.  SBTCS and Vectra Bank  Colorado,  National  Association,  a wholly-owned
subsidiary of Val Cor,  consolidated to form a new national banking  association
named Vectra Bank Colorado, National Association ("Vectra Bank"). SBTCS operated
through two banking offices in Colorado Springs, Colorado. At December 31, 1997,
SBT  had  assets  of  $86   million.   The  merger  was   accounted   for  as  a
pooling-of-interests.

     On  May  29,  1998,  Zions  and  Routt  County  National  Bank  Corporation
("Routt"),  the holding  company of First  National  Bank of Colorado  ("FNBC"),
completed  their  merger,  whereby  Routt  merged with and into Val Cor and FNBC
merged with and into Vectra Bank. At closing, Zions issued 650,000 shares of its
Common Stock to the former  shareholders  of Routt.  FNBC  operated  through two
banking offices in Steamboat Springs,  Colorado. At December 31, 1997, Routt had
assets of $93 million. The merger was accounted for as a pooling-of-interests.

                                       9


<PAGE>



     On March 25,  1998,  Zions and  Sumitomo  Bank of  California  ("Sumitomo")
entered  into  a  definitive  agreement  whereby  Sumitomo  will  merge  with  a
subsidiary  of Zions.  Zions  will pay  approximately  $546  million in cash for
Sumitomo.  Sumitomo is currently California's sixth largest bank, with assets of
approximately $5.1 billion as of December 31, 1997, and with 47 branches.  Zions
will  combine  Sumitomo  with  Grossmont  Bank upon  completion  of the Sumitomo
acquisition.  The combined subsidiary, with California assets of over $6 billion
and 71 banking offices in California,  will rank as the fifth largest commercial
bank in the state and will be named  California  Bank and  Trust.  The merger is
subject to the approval of Sumitomo  shareholders and banking  regulators and is
expected  to close in the third  quarter of 1998.  Zions  expects to finance the
purchase  through a combination  of existing  resources,  the sale of a minority
interest in  Sumitomo,  and the  proceeds  from the  issuance of shares of Zions
Common Stock. The acquisition will be accounted for as a purchase. Zions expects
to name Robert Sarver,  currently chairman of Grossmont and a director of Zions,
as chief executive  officer of California Bank and Trust. In order to provide an
appropriate incentive to Mr. Sarver to expand Zions' California franchise, Zions
has agreed to sell him a portion of Sumitomo at Zions' cost basis. When Sumitomo
is  combined  with  Grossmont  Bank and First  Pacific,  he will  control  5% of
California  Bank and Trust at a purchase  price of  approximately  $34  million.
Zions will retain the exclusive right to repurchase this ownership interest.

    On August 28, 1998,  Zions completed its  acquisition of Kersey  Bancorp,  a
Colorado  corporation  ("Kersey") and its wholly-owned  subsidiary,  Independent
Bank, a commercial  bank  organized  under  Colorado law  ("Independent").  Upon
completion of this transaction, Kersey merged with and into Val Cor with Val Cor
being the surviving  corporation,  and  Independent  merged with and into Vectra
Bank, with Vectra Bank being the surviving national banking  association.  As of
March 31, 1998, Kersey had consolidated assets of approximately  $144.3 million,
consolidated  deposits of approximately  $133.2 million,  loans of approximately
$112.3  million,   and  shareholders'  equity  of  approximately  $8.5  million.
Independent conducted its commercial banking operations through seven offices in
Larimer, Logan, Morgan, and Weld Counties, Colorado. Zions issued 620,000 shares
of its Common Stock to the former  Kersey  shareholders  upon  completion of the
transaction, which was accounted for as a pooling of interests.

    On August  31,  1998,  Zions  completed  its  acquisition  of Eagle  Holding
Company, a Colorado corporation ("Eagle"), and its wholly-owned subsidiary Eagle
Bank, a  Colorado-chartered  commercial bank ("Eagle Bank").  Upon completion of
this  transaction,  Eagle  merged  with and into Val Cor with Val Cor  being the
surviving  corporation,  and Eagle Bank  merged  with and into  Vectra Bank with
Vectra  Bank  being the  surviving  national  banking  association.  Eagle  Bank
conducted  a  commercial  banking  business  through  one office in  Broomfield,
Boulder County, Colorado. As of March 31, 1998, Eagle had consolidated assets of
approximately  $40.8  million,  consolidated  deposits  of  approximately  $37.5
million,  loans of  approximately  $27.5 million,  and  shareholders'  equity of
approximately $2.9 million. Upon completion of this transaction, Zions issued to
the  former  shareholders  of Eagle  230,000  shares of its  Common  Stock.  The
transaction was accounted for as a pooling of interests.

                                       10


<PAGE>



    On  September  8, 1998,  Zions  completed  its  acquisition  of The Commerce
Bancorporation,  a Washington corporation ("Commerce"),  whereby Commerce merged
with and into  Zions  with  Zions  being  the  surviving  corporation.  Commerce
conducted  its  commercial   banking   operations  in  one  office  in  Seattle,
Washington,   through  its  wholly-owned   subsidiary,   The  Commerce  Bank  of
Washington,  National Association, a commercial bank organized under the laws of
the United States  ("CBW").  Upon completion of this  transaction,  CBW became a
wholly-owned   subsidiary  of  Zions.  As  of  March  31,  1998,   Commerce  had
consolidated assets of approximately  $330.2 million,  consolidated  deposits of
approximately  $245.3  million,  loans  of  approximately  $151.0  million,  and
shareholders' equity of approximately $24.5 million. Zions issued [2,020,791] of
its  shares  of  Common  Stock  to the  former  shareholders  of  Commerce  upon
completion  of  the  transaction,  which  was  accounted  for  as a  pooling  of
interests.

    CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION

    Please  note that  certain  statements  in this  Proxy  Statement/Prospectus
(including  information  included or incorporated by reference) are not based on
historical  facts,  but are  forward-looking  statements,  within the meaning of
Section  27A of the  Securities  Act of 1933,  as  amended,  that are based upon
numerous  assumptions about future conditions that could prove to be inaccurate.
Actual  events,   transactions  and  results  may  materially  differ  from  the
anticipated events, transactions or results described in such statements. Zions'
ability to consummate  such  transactions  and achieve such events or results is
subject  to  certain  risks and  uncertainties.  Such  risks  and  uncertainties
include,  but are not limited to, the existence of demand for and  acceptance of
Zions' products and services,  regulatory  approvals and developments,  economic
conditions,  the impact of competition and pricing, results of financing efforts
and other factors  affecting  Zions'  business  that are beyond Zions'  control.
Factors  that  could  cause  future  results  to vary  from  current  management
expectations  include,  but are not limited  to,  general  economic  conditions,
legislative and regulatory changes,  monetary and fiscal policies of the federal
government,  changes in tax policies, rates and regulations of federal and local
tax  authorities,  changes in interest rates,  deposit flows, the cost of funds,
demand for loan products, demand for financial services, competition, changes in
the quality or composition of Zions' loan and investment portfolios,  changes in
accounting principles,  policies or guidelines, and other economic, competitive,
governmental and  technological  factors affecting Zions'  operations,  markets,
products, services and prices.

                      WHERE YOU CAN FIND MORE INFORMATION

     This Proxy  Statement/Prospectus  constitutes  the prospectus  portion of a
registration statement (the "Registration  Statement") that Zions has filed with
the Securities and Exchange  Commission  (the "SEC") under the Securities Act of
1933 (the  "Securities  Act") covering the shares of Zions Common Stock issuable
in the  Reorganization.  As permitted by the rules and  regulations  of the SEC,
this Proxy Statement/Prospectus omits certain information, exhibits

                                       11




<PAGE>



and  undertakings  contained  in  the  Registration  Statement.  The  statements
contained in this Proxy  Statement/Prospectus as to the contents of any contract
or other  document  filed as an exhibit  to the  Registration  Statement  are of
necessity  brief  descriptions  and  are not  necessarily  complete.  Each  such
statement is qualified in its entirety by reference to the copy of such contract
or document filed as an exhibit to the Registration  Statement.  You can inspect
the Registration  Statement and its exhibits at the public reference  facilities
of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. You can obtain
copies of such material at prescribed rates by mail addressed to the SEC, Public
Reference Section, Washington, D.C. 20549.

    Zions  is  subject  to the  informational  requirements  of  the  Securities
Exchange Act of 1934 (the  "Exchange  Act").  Zions files annual,  quarterly and
current reports,  proxy  statements and other  information with the SEC. You can
inspect and copy such reports,  proxy  statements  and other  information at the
public  reference  facilities of the SEC at Room 1024,  450 Fifth Street,  N.W.,
Washington,  D.C.;  and at the  following  regional  offices of the SEC: 7 World
Trade Center,  Suite 1300, New York, NY 10048; and at Citicorp Center,  500 West
Madison Street, Suite 1400, Chicago,  Illinois  60661-2511.  You can also obtain
copies of such material at prescribed rates by mail addressed to the SEC, Public
Reference Section,  Washington, D.C. 20549. The public may obtain information on
the operations of the Public  Reference Room by calling the SEC at 800/SEC-0330.
Zions Common Stock is quoted on the Nasdaq National Market System  (hereinafter,
the "Nasdaq  NMS").  You can inspect such reports,  proxy  statements  and other
information  at  the  offices  of  Nasdaq  Operations,   1735  K  Street,  N.W.,
Washington,  D.C. The SEC maintains a Web site that contains reports,  proxy and
information  statements,  and other information  regarding registrants that file
electronically with the SEC at http://www.sec.gov.

    No  person  is   authorized  to  give  any   information   or  to  make  any
representation   that  is  different  from  what  is  contained  in  this  Proxy
Statement/Prospectus   and,  if  given  or  made,   any  such   information   or
representation  should not be relied upon as having been  authorized by Zions or
the Company.  This Proxy  Statement/Prospectus  does not  constitute an offer to
sell  securities  or a  solicitation  of an offer to purchase  securities by any
person in any state in which such offer or  solicitation  is not  authorized  by
that state's laws or in which the person  making such offer or  solicitation  is
not   qualified   to  make  the  same.   Neither  the  delivery  of  this  Proxy
Statement/Prospectus  at any time nor the  distribution of Zions Common Stock to
Company   shareholders   shall  imply  that  the   information   in  this  Proxy
Statement/Prospectus is correct as of any time subsequent to its date.

    Zions   has   supplied   the    information    contained   in   this   Proxy
Statement/Prospectus  with  respect  to Zions.  The  Company  has  supplied  the
information  contained  in this Proxy  Statement/Prospectus  with respect to the
Company.  Neither Zions nor the Company warrants the accuracy or completeness of
information relating to the other.

    THIS PROXY STATEMENT/PROSPECTUS  INCORPORATES BY REFERENCE CERTAIN DOCUMENTS
RELATING TO ZIONS WHICH ARE NOT  PRESENTED IN THIS  DOCUMENT OR  DELIVERED  WITH
THIS PROXY

                                       12


<PAGE>



STATEMENT/PROSPECTUS,  INCLUDING  CERTAIN EXHIBITS TO THE PLAN OF REORGANIZATION
(AS DESCRIBED IN THIS  DOCUMENT).  COPIES OF SUCH  DOCUMENTS ARE AVAILABLE  UPON
REQUEST AND WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS
HAS BEEN  DELIVERED.  YOU CAN  DIRECT  REQUESTS  FOR  ZIONS  DOCUMENTS  TO ZIONS
BANCORPORATION,  ONE SOUTH  MAIN,  SUITE  1380,  SALT  LAKE  CITY,  UTAH  84111,
ATTENTION: DALE M. GIBBONS, EXECUTIVE VICE PRESIDENT, (TELEPHONE: 801/524-4787).
IN ORDER TO ENSURE  TIMELY  DELIVERY  OF ZIONS  DOCUMENTS,  YOU SHOULD MAKE YOUR
REQUEST NOT LATER THAN __, 1998.

                   ZIONS DOCUMENTS INCORPORATED BY REFERENCE

    SEC regulations  allow Zions to "incorporate by reference"  information into
this Proxy  Statement/Prospectus,  which means that Zions can disclose important
information to you by referring you to another  document filed  separately  with
the SEC. The information  incorporated by reference is deemed to be part of this
Proxy Statement/Prospectus, except for any information superseded by information
in this Proxy  Statement/Prospectus.  Zions  incorporates  by  reference in this
Proxy Statement/Prospectus the following documents that it previously filed with
the SEC pursuant to the Exchange  Act: (a) Zions' Annual Report on Form 10-K for
the year ended December 31, 1997; (b) Zions' Quarterly  Reports on Form 10-Q for
the quarters ended March 31, 1998 and June 30, 1998; (c) Zions' Current  Reports
on Form 8-K filed by Zions on February 6, 1998,  April 3, 1998,  April 15, 1998,
and May 18,  1998,  as amended on May 27,  1998;  (d) the  description  of Zions
Common Stock which is contained in Zions' registration statement on Form 10, and
any amendment or report filed for the purpose of updating such description;  and
(e) the  description of the Zions Rights Plan  contained in Zions'  registration
statement on Form 8-A dated October 10, 1996,  and any amendment or report filed
for the purpose of updating such description.

    Any Company  shareholder  who wishes to obtain copies of any Zions  document
incorporated  by  reference  in  this  document  may  do  so  by  following  the
instructions  under the  section  titled  "Where You Can Find More  Information"
above.

                                       13




<PAGE>



                              THE SPECIAL MEETING

DATE, TIME, AND PLACE

    This Proxy  Statement/Prospectus  is being furnished to the  shareholders of
the  Company  in  connection  with the  solicitation  of proxies by the Board of
Directors  of  the  Company  for  use  at  the  Company's   Special  Meeting  of
Shareholders to be held on ,1998 at 361 W. Highway 24,  Woodland Park,  Colorado
at 9:00 a.m., local time, or at any adjournments or postponements thereof.

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

    The  purposes  of the Special  Meeting  are (1) to consider  and vote upon a
proposal of the Board of Directors to approve the Plan of Reorganization and the
transactions contemplated thereby and (2) to transact such other business as may
properly come before the Special Meeting or any adjournments or postponements of
the Special Meeting.

    THE BOARD OF  DIRECTORS  OF THE  COMPANY  UNANIMOUSLY  approved  the PLAN OF
REORGANIZATION  AND RECOMMENDS  THAT THE  SHAREHOLDERS OF the Company vote "FOR"
APPROVAL OF THE PLAN OF REORGANIZATION.

RECORD DATE; VOTING RIGHTS

    Shareholders  of the Company,  as reflected on the Company's  stock transfer
records as of the close of business on ,1998 (the "Record  Date"),  are entitled
to  notice  of and to  vote  at the  Special  Meeting  or any  postponements  or
adjournments  of the  Special  Meeting.  On the Record  Date,  50,000  shares of
Company Common Stock were outstanding,  held by approximately 16 shareholders of
record.  Each such share of Company Common Stock entitles its holder to one vote
on each matter properly  submitted to the shareholders for action at the Special
Meeting.   See   "Plan  of   Reorganization   --   Required   Vote;   Management
Recommendation."

QUORUM; VOTE REQUIRED FOR APPROVAL

    The  presence,  in person or by proxy,  of the  holders of a majority of the
issued and  outstanding  shares of Company  Common Stock entitled to vote at the
Special  Meeting is  necessary to  constitute  a quorum at the Special  Meeting.
Approval  of the  Plan  of  Reorganization  requires  the  affirmative  vote  of
two-thirds of the outstanding shares of Company Common Stock entitled to vote at
the Special Meeting.  A failure to vote, an abstention,  or a broker non-vote of
shares  held in street  name will have the same legal  effect as a vote  against
approval of the Plan of Reorganization.  See "Plan of Reorganization -- Required
Vote; Management Recommendation."

                                       14


<PAGE>



VOTING AND REVOCATION OF PROXIES

    Shareholders  may vote at the Special  Meeting either in person or by proxy.
All properly  executed  Proxies which have not been  previously  revoked will be
voted at the  Special  Meeting,  or any  postponements  or  adjournments  of the
Special  Meeting,  in accordance with the  instructions  on the Proxy.  Properly
executed Proxies which contain no voting  instructions will be voted in favor of
approval of the Plan of  Reorganization.  As to any other matter  brought before
the Special Meeting and submitted to a shareholder  vote,  Proxies will be voted
in  accordance  with  the  judgment  of the  named  proxyholders.  The  Board of
Directors  is not aware of any  other  matter  that  might be  presented  at the
Special Meeting.

    A  shareholder  who has  executed  and returned a Proxy may revoke it at any
time before it is voted by filing  with the  Secretary  of the  Company  written
notice of such  revocation  or a later dated and properly  executed  Proxy or by
attending  the Special  Meeting and voting in person.  Attendance at the Special
Meeting will not, of itself, constitute a revocation of a Proxy.

SOLICITATION OF PROXIES

    In addition to  solicitation by mail,  directors,  officers and employees of
the Company may solicit  Proxies from the  shareholders of the Company in person
or by telephone or otherwise  for no additional  compensation.  The Company will
pay all expenses in connection with the printing,  delivery and  solicitation of
the proxy material s to the Company shareholders for the Special Meeting.

SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    As of June 30,  1998,  ten  directors of the  Company,  together  with their
affiliated entities,  and a principal  shareholder of the Company,  beneficially
owned 46,454 shares, or approximately 92.9% of the outstanding shares of Company
Common   Stock.   As  an   inducement  to  Zions  to  enter  into  the  Plan  of
Reorganization,  these directors,  their affiliated entities,  and the principal
shareholder entered into agreements with Zions under which they agreed, in their
capacity  as  shareholders,  to  vote  their  shares  in  favor  of the  Plan of
Reorganization. See "Plan of Reorganization--Voting Agreements" and "Information
Concerning the Company and the  Bank--Stockholdings  of Directors,  Officers and
Certain  Others."  Such a vote  will  be  sufficient  to  approve  the  Plan  of
Reorganization.  If these shareholders vote their shares in favor of the Plan of
Reorganization  as they have agreed,  approval of the Plan of  Reorganization is
assured.

PLAN OF REORGANIZATION

    This section of the Proxy  Statement/Prospectus  describes certain important
aspects of the Plan of Reorganization. The following description is not complete
and is qualified  in its  entirety by  reference to the Plan of  Reorganization,
which is attached as Appendix A to this

                                       15


<PAGE>



Proxy Statement/Prospectus.  Certain exhibits to the Plan of Reorganization have
been  filed  with the SEC as an  exhibit  to the  Registration  Statement.  Such
exhibits  to the  Plan  of  Reorganization  are  incorporated  into  this  Proxy
Statement/Prospectus  by reference to such filing and are available upon request
to Dale M. Gibbons, Executive Vice President,  Zions Bancorporation.  See "Where
You   Can   Find   More    Information"   and   Appendix   A   to   this   Proxy
Statement/Prospectus.

THE REORGANIZATION

    The Plan of  Reorganization  provides for the merger of the Company into Val
Cor,  with  Val Cor  being  the  surviving  corporation  (the  "Holding  Company
Merger"),  and for the merger of the Bank into  Vectra  Bank,  with  Vectra Bank
being the surviving national banking association (the "Bank Merger").

    Upon consummation of the  Reorganization,  Zions will issue up to a total of
608,000  shares  of its  Common  Stock  to the  Company's  shareholders.  At The
Effective Date of the Reorganization, the shares of Company Common Stock will be
canceled and  immediately  converted into the right for Company  shareholders to
receive, in exchange for each share of Company Common Stock that they own, 12.16
shares of Zions Common Stock.  "Effective Date" means the date when all required
conditions set forth in the Plan of Reorganization  have been fulfilled and when
the  Reorganization  shall have been consummated.  For a detailed  definition of
"Effective Date," see Article 2 of the Plan of  Reorganization,  attached hereto
as Appendix A. Zions will not issue fractional shares of its Common Stock in the
Reorganization.  See  "Conversion  of Company  Shares -- Payment for  Fractional
Shares," below.

    On ,1998,  the closing  price of Zions  Common Stock on Nasdaq NMS was $ per
share. On that date there were issued and  outstanding  50,000 shares of Company
Common Stock.  Assuming that the  Reorganization  had been  consummated  on that
date, Company  shareholders under such circumstances would have been entitled to
receive  12.16  shares of Zions  Common  Stock for each share of Company  Common
Stock that they own, or an  equivalent  market value of  approximately  $___ per
share of Company Common Stock.

BACKGROUND OF AND REASONS FOR THE REORGANIZATION

    The Company.  The Board of Directors of the Company has unanimously approved
the Plan of  Reorganization  and has determined that the  Reorganization is fair
to, and in the best  interests of, the Company and its  stockholders.  The Board
therefore  unanimously  recommends  that the holders of the Company Common Stock
vote "FOR" the approval and adoption of the Plan of Reorganization.  In reaching
its  determination,  the Board  considered  a number of factors,  including  the
following:

    The Board  believes that the  Reorganization  will enable all holders of the
Company  Common  Stock to realize  significant  value when  compared to the book
value per share of

                                       16


<PAGE>



Company Common Stock prior to the  announcement of the  transaction.  The stated
book value per share of Company  Common  Stock as of June 30, 1998 was  $167.68.
See "Plan of Reorganization -- Interests of Certain Persons in the Transaction."

    In reaching its determination that the Reorganization is fair to, and in the
best interests of, the Company and its  stockholders,  the Board of Directors of
the  Company  considered  a  number  of  factors,  both  from a  short-term  and
longer-term perspective, including, but not limited to, the following:

     (i) The  Board's  familiarity  with and review of the  business,  financial
     condition,  results of  operations  and  future  prospects  of the  Company
     including,   but  not  limited  to,  the  potential  growth,   development,
     productivity and profitability of the Company;

     (ii) The current and prospective environment in which the Company operates,
     including   national  and  local  economic   conditions,   the  competitive
     environment  for banks  and other  financial  institutions  generally,  the
     increased regulatory burden on financial institutions generally,  the trend
     toward  consolidation  in the  financial  services  industry and the likely
     effect  of  the  foregoing  factors  on  the  Company's  potential  growth,
     development, productivity and profitability;

     (iii) Pro forma  financial  information on the  Reorganization,  including,
     among other things,  the pro forma book value and earnings per share to the
     Company's stockholders;

     (iv) A  comparison  of the price being paid in the  Reorganization  to that
     paid in other comparable bank mergers;

     (v) The tax free nature of the  transaction  to the Company's  stockholders
     (see, generally,  -- Federal Income Tax Consequences of the Reorganization"
     herein);

     (vi) The  historical  trading prices for the Company Common Stock and Zions
     Common Stock;

     (vii) The Company's alternatives to the Reorganization, including the range
     of possible values of those  alternatives  and the timing and likelihood of
     actually receiving those values;

     (viii) The expectations  that the  Reorganization  would provide holders of
     the Company  Common Stock with an opportunity to receive a premium over the
     then current market and book value of such stock and that the consideration
     received by the Company stockholders in the Reorganization would constitute
     a favorable  premium  compared to the expected future values of the Company
     Common Stock under a variety of circumstances and assumptions;

                                       17


<PAGE>



     (ix) The review by the Board with its legal and  financial  advisors of the
     provisions of the Plan of Reorganization, and other related documents; and

     (x)  The   compatibility   of  the   respective   business  and  management
     philosophies of Zions and the Company and the  expectation  that Zions will
     continue to provide quality service to the communities and customers served
     by the Company.

     The  foregoing  does  not  purport  to be a  complete  list of the  matters
considered   by  the  Board  of  Directors  of  the  Company  in  approving  the
Reorganization. In approving the Reorganization,  the Board did not identify any
one factor or group of factors as being more important or  significant  than any
other factor in the decision making process.

    Zions.  For Zions,  the  Reorganization  will  provide  the  opportunity  to
continue  its  recent  expansion.  In  acquiring  the  Company,  Zions  will  be
broadening its Colorado  presence in the mountain area west of Colorado  Springs
and in Teller  County,  Colorado.  Zions does not currently  have any offices in
Teller County. Additionally,  Zions' expansion in the Teller County area west of
Colorado Springs will allow Zions further to diversify its banking operations.

    The  acquisition  by Zions of the Company will bring  together the different
skills and resources of the two organizations  and, together with the additional
skills and resources available in the broader Zions organization, will result in
the ability to make a wider spectrum of banking services available to consumers,
businesses and professionals in the Company's geographic area.

VOTING AGREEMENTS

    All of the directors  and executive  officers of the Company and a principal
shareholder  of the Company have agreed to vote their  shares of Company  Common
Stock in favor of the Plan of Reorganization.  As of June 30, 1998, these eleven
individuals and their affiliated  entities  beneficially  owned 46,454 shares or
approximately 92.9% of the outstanding shares of Company Common Stock. Such vote
will be sufficient to approve the Plan of  Reorganization.  If these individuals
vote their shares of Company Common Stock in accordance with the requirements of
the voting  agreements,  approval of the Plan of  Reorganization  by the Company
shareholders   is  assured.   The  voting   agreements  are  applicable  to  the
shareholders  only in their capacities as shareholders and do not legally affect
the exercise of their  responsibilities as a member of the Board of Directors of
the Company.

    Subject to their fiduciary duties to shareholders, the directors also agreed
in their  capacity  as  directors,  to support  the Plan of  Reorganization,  to
recommend its adoption by the other  shareholders of the Company,  and until the
Effective   Date  of  the   Reorganization   or   termination  of  the  Plan  of
Reorganization, to refrain from soliciting or negotiating or accepting any offer
of  merger,  consolidation,  or  acquisition  of  any of  the  shares  or all or
substantially all of the assets of the Company or the Bank.


                                       18

<PAGE>



    The form of the voting  agreements has been filed with the SEC as an exhibit
to   the   Registration   Statement   and  is   incorporated   in   this   Proxy
Statement/Prospectus  by reference.  The foregoing  summary of the agreements is
qualified in its entirety by reference to such filing.

REQUIRED VOTE; MANAGEMENT RECOMMENDATION

    Approval of the Plan of Reorganization  requires the affirmative vote of the
holders of two-thirds of the outstanding shares of Company Common Stock entitled
to vote at the Special Meeting.  Because approval  requires the affirmative vote
of two-thirds of all  outstanding  shares of Company  Common Stock, a failure to
vote,  an  abstention,  or a broker  non-vote of shares held in street name will
have  the  same  legal  effect  as a  vote  against  approval  of  the  Plan  of
Reorganization.  See "Voting  Agreements"  immediately above for a discussion of
the  ownership  of Company  Common  Stock by various  officers,  directors,  and
shareholders of the Company.  The Board of Directors of the Company  unanimously
recommends that the  shareholders of the Company vote "FOR" approval of the Plan
of  Reorganization  and urges each  shareholder  to complete,  sign and return a
Proxy as soon as possible to ensure  that his or her shares are  represented  at
the Special Meeting.

    The Board of Directors of Zions has approved the Plan of Reorganization.  In
addition,  Zions,  as the sole  shareholder of Val Cor, has approved the Holding
Company Merger and the merger of Val Cor with the Company (the "Holding  Company
Merger").  Under the Utah Business  Corporation  Act, no approval of the Plan of
Reorganization by the shareholders of Zions is required.

NO OPINION OF A FINANCIAL ADVISOR

    The Company's  Board of Directors has not retained an independent  financial
advisor  to  evaluate  the  merger   consideration   offered  to  the  Company's
shareholders  by Zions.  However,  management  and the  directors of the Company
believe  that  the  merger  consideration  to be paid  pursuant  to the  Plan of
Reorganization is fair to the shareholders of the Company from a financial point
of view. See "Background of and Reasons for the Reorganization" above.

CONVERSION OF COMPANY SHARES

    Under the Plan of Reorganization,  Company  shareholders will receive shares
of Zions Common Stock in exchange for their shares of Company Common Stock. As a
result  of the  Reorganization,  the  shares of  Company  Common  Stock  will be
canceled and  immediately  converted into the right for Company  shareholders to
receive 12.16 shares of Zions Common Stock in exchange for each share of Company
Common Stock that they own.

    Exchange  of Stock  Certificates.  Zions  First  National  Bank,  a national
banking  association  with its head office located in Salt Lake City, Utah and a
subsidiary  of Zions ("Zions  Bank"),  is the exchange  agent  designated by the
parties in the Plan of Reorganization


                                       19

<PAGE>



(the "Exchange  Agent").  Promptly after the Effective Date,  Zions Bank, as the
Exchange  Agent,  will  mail to each  holder of one or more  stock  certificates
formerly  representing  shares of Company Common Stock,  except to those holders
who have waived the notice of exchange,  a notice  specifying the Effective Date
and notifying the holder to surrender his or her  certificate or certificates to
Zions Bank for exchange. The notice will be mailed to holders by regular mail at
their addresses on the records of the Company.  Company  SHAREHOLDERS SHOULD NOT
SEND IN THEIR  CERTIFICATES  UNTIL THEY RECEIVE  WRITTEN  INSTRUCTIONS  FROM THE
EXCHANGE  Agent.   However,   Company   shareholders   should   surrender  their
certificates promptly after receiving instructions to do so.

    Any dividends declared on Zions Common Stock after the Effective Date of the
Reorganization  will apply to all whole  shares of Zions Common Stock into which
shares of Company Common Stock will have been  converted in the  Reorganization.
However, no former Company shareholder will be entitled to receive any dividends
until he or she has surrendered his or her Company Common Stock certificates for
exchange as provided in the letter of  transmittal  sent by the Exchange  Agent.
Upon  surrender,  the  shareholder  will be entitled  to receive  all  dividends
payable on the whole shares of Zions Common Stock represented by the surrendered
certificate(s) (without interest and less the amount of taxes, if any, which may
have been imposed or paid on such shares).

    Payment for Fractional Shares. Zions will not issue any fractional shares of
its Common Stock in connection with the  Reorganization.  Instead,  each Company
shareholder  who  surrenders  for exchange  Company  Common  Stock  certificates
representing  a  fraction  of a share of Zions  Common  Stock will  receive,  in
addition to a certificate for the whole shares of Zions Common Stock represented
by the surrendered  certificates,  cash in an amount equal to the product of the
fraction times $51.50.  Shareholders will have no further rights as shareholders
with respect to fractional shares.

    Unexchanged Certificates.  On the Effective Date of the Reorganization,  the
Company  will close its stock  transfer  books,  and the Company  will permit or
recognize no further  transfers of its Common  Stock.  Certificates  for Company
Common Stock not  surrendered  for exchange  will entitle the holder to receive,
upon surrender as provided in the letter of transmittal, a certificate for whole
shares of Zions Common Stock,  plus payment of any amount for a fractional share
or dividends to which such holder is entitled as outlined above, and without any
interest on such shares.

FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION

    The  following  discussion is a summary of the material  federal  income tax
consequences  of  the   Reorganization  to  the  Company  and  to  the  existing
shareholders of the Company, but is not a complete analysis of all the potential
tax effects of the  Reorganization.  The  discussion  is based upon the Internal
Revenue Code of 1986, as amended (the "Code"),  Treasury  Regulations,  Internal
Revenue  Service ("IRS")  rulings and judicial  decisions now in effect,  all of
which  are  subject  to  change  at  any  time  by  legislative,   judicial,  or
administrative action.

                                       20
<PAGE>



Any such change may be applied retroactively.  No information is provided in the
discussion  with respect to foreign,  state or local tax laws or estate and girl
tax  considerations.  Shareholders of the Company are urged to consult their own
tax advisors as to specific tax consequences to them of the Reorganization.

    The Reorganization is intended to qualify as a tax-free reorganization under
Section 368(a) of the Code. Accordingly,  the Company will not recognize gain or
loss for federal  income tax purposes  upon  completion  of the  Reorganization.
Shareholders  of  the  Company  will  have  the  following  federal  income  tax
consequences  upon  the  Reorganization:  (i) no  taxable  gain or loss  will be
recognized  upon the receipt of Zions  Common  Stock,  except to the extent that
cash,  if any, is received in lieu of  fractional  shares of Zions Common Stock;
(ii)  the  tax  basis  of  the  Zions   Common  Stock  to  be  received  in  the
Reorganization (including any fractional share interest) will be the same as the
tax basis of the Company Common Stock  surrendered in exchange  therefor;  (iii)
the  holding   period  of  the  Zions   Common  Stock  to  be  received  in  the
Reorganization  will  include the holding  period of the  Company  Common  Stock
surrendered in exchange therefor,  provided the Company Common Stock was held as
a capital  asset on the date of the  exchange;  (iv) if any cash is  received in
lieu of a  fractional  share  of  Zions  Common  Stock,  gain  or  loss  will be
recognized  in an amount equal to the  difference  between the cash received and
the  shareholder's  basis in that fractional share and such gain or loss will be
capital gain or loss if the fractional  share would have been a capital asset in
the hands of the  shareholder;  and (v) cash  received  by a  dissenter  who has
perfected  dissenters'  rights under the Colorado Business  Corporation Act, ss.
ss. 7-113-101 et seq. as to his or her Company Common Stock will be treated as a
distribution in redemption of such shares,  subject to the provisions of Section
302 of the Code.

    The Company  will  receive an opinion  from Duane,  Morris & Heckscher  LLP,
legal counsel to Zions (the "Duane Morris  Opinion") as to the tax  consequences
of the Reorganization.  No ruling will be requested from the IRS with respect to
the federal income tax consequences of the Reorganization. An opinion of counsel
only  represents  counsel's  best  judgment and is not binding on the IRS or the
courts.  Accordingly,  no  assurance  can be given  that the IRS will agree with
counsel's conclusions,  that the IRS will not challenge the tax treatment of the
Reorganization, or that such a challenge, if made, will not be successful.

    A copy of the Duane Morris Opinion which will be rendered as to the material
federal income tax consequences  relating to the  Reorganization  has been filed
with the SEC as an exhibit to the Registration  Statement and is incorporated in
this Proxy Statement/Prospectus by reference. The foregoing summary of the Duane
Morris Opinion is qualified in its entirety by reference to such filing.

RIGHTS OF DISSENTING SHAREHOLDERS

    A holder of shares of Company  Common  Stock is  entitled  to  exercise  the
rights of a dissenting  shareholder under the Colorado Business Corporation Act,
ss. ss. 7-113-101 et seq., to object to the Plan of Reorganization,  and to make
written demand that Val Cor pay in cash the


                                       21

<PAGE>



fair  value  of the  shares  of  Company  Common  Stock  held as  determined  in
accordance  with such  statutory  provisions.  The  following  summary  is not a
complete  statement  of the  provisions  of Colorado law and is qualified in its
entirety by reference to such statutory  provisions,  which are provided in full
as Appendix B to this Proxy Statement/Prospectus.

    Colorado law requires that Company  shareholders  follow certain  prescribed
procedures  in the exercise of their  statutory  right to dissent in  connection
with the Reorganization.  The FAILURE BY A SHAREHOLDER TO FOLLOW SUCH PROCEDURES
ON A TIMELY BASIS AND IN THE PRECISE MANNER  REQUIRED BY COLORADO LAW MAY RESULT
IN A LOSS OF THAT SHAREHOLDER'S DISSENTERS' RIGHTS.

    Overview.  Company  shareholders  have the right under the Colorado Business
Corporation  Act to dissent from the  Reorganization  and obtain  payment of the
fair value of their shares of Company  Common Stock.  Fair value means the value
of the shares of Company  Common Stock  immediately  before the Effective  Date,
excluding any  appreciation  or  depreciation  in  anticipation of the corporate
action except to the extent  exclusion  would be  inequitable.  If Val Cor and a
shareholder  who has  exercised  his or her  right  to  dissent  (a  "Dissenting
Shareholder")  are not able to agree on a fair  value.  Val Cor must  petition a
court IN Teller County, Colorado for a determination of fair value.

    Procedure  for  Dissenting.  A  shareholder  wishing  to  dissent  from  the
Reorganization  must  deliver  to the  Company,  before the vote is taken at the
Special  Meeting,  written notice of his or her intent to demand payment for his
or her shares if the Reorganization is consummated. The written notice should be
sent to the Company at 361 W. Highway 24,  Woodland  Park,  Colorado  80866-9039
long enough before the Special Meeting so that the Company  receives such notice
before  the vote is taken at the  Special  Meeting.  A  shareholder  wishing  to
dissent  must  also  not  vote IN  favor  of the  Plan of  Reorganization.  If a
shareholder's  written notice of intent to demand payment is not received by the
Company before the Special Meeting,  or if the shareholder votes in favor of the
Plan of Reorganization,  such shareholder will not have the right to dissent and
will be required to participate in the  Reorganization.  A VOTE BY A SHAREHOLDER
AT THE SPECIAL  MEETING AGAINST THE PLAN OF  REORGANIZATION  WILL NOT CONSTITUTE
NOTICE UNDER COLORADO LAW OF AN INTENT TO EXERCISE APPRAISAL RIGHTS.

    Within 10 days  after  the  Effective  Date,  Val Cor will  deliver  to each
Dissenting  Shareholder a written notice instructing the Dissenting  Shareholder
to demand payment and send his or her Company Common Stock  certificates  to Val
Cor.  The notice  will  include a form for  demanding  payment and will show the
deadline for  submitting  the payment  demand form and the Company  Common Stock
certificates.  The form may also show the date that the Reorganization was first
announced to the news media or the shareholders,  and the Dissenting Shareholder
may be required  to state  whether or not he or she  acquired  his or her shares
before that date.

    The Dissenting  Shareholder must then properly complete and sign the payment
demand form, and submit it to Val Cor along with his or her Company Common Stock
certificates by


                                       22

<PAGE>



the  deadline  shown in the notice from Val Cor. If the payment  demand form and
the Company  Common Stock  certificates  are not submitted by the deadline,  the
shareholder will no longer be a Dissenting  Shareholder and will not be entitled
to receive  payment of the fair value of his or her shares under the dissenters'
rights  provisions  of  Colorado  law.  Such a  shareholder  will be required to
participate  in the  Reorganization.  The payment demand form and Company Common
Stock certificates  should be sent to Val Cor at 1650 South Colorado  Boulevard,
Suite 320, Denver, Colorado 80222.

    Payment for Shares. Upon the later of the Effective Date or the receipt of a
Dissenting   Shareholder's   payment   demand  form  and  Company  Common  Stock
certificates, Val Cor will pay such Dissenting Shareholder Val Cor's estimate of
the  fail-value  of  the  Company  Common  Stock  for  which  certificates  were
submitted,  plus accrued  interest.  Accompanying  the payment will be financial
information  for the Company as of the end of its most recent  fiscal  year,  as
well as the latest available  interim financial  information.  Also accompanying
the payment will be a statement  of Val Cor's  estimate of the fair value of the
shares,  an explanation of how the interest was  calculated,  a statement of the
Dissenting  Shareholder's  rights if such  shareholder is dissatisfied  with Val
Cor's payment, and a copy of the relevant Colorado statute.

    If a Dissenting  Shareholder  estimates  the fair value of his or her shares
and the amount of accrued  interest  is higher  than the amount paid by Val Cor,
the Dissenting Shareholder may send a notice to Val Cor demanding payment of the
difference between the Dissenting  Shareholder's estimate and the amount paid by
Val Cor. The Dissenting Shareholder may reject Val Cor's offer to pay fair value
and demand payment of the Dissenting Shareholder's estimate of the fair value of
his or her shares and accrued  interest.  If a Dissenting  Shareholder  does not
send a  notice  demanding  payment  within  30 days  after  Val Cor has made its
payment or offer, the Dissenting  Shareholder will not have the right to receive
any amount in excess of the fair value plus interest  already paid or offered by
Val Cor.

    Court  Proceeding to Determine Fair Value.  If a demand for payment  remains
unsettled for 60 days  following  Val Cor's  receipt of the demand,  Val Cor may
petition a court in Teller  County,  Colorado to determine the fair value of the
shares  and  accrued  interest.  Court  costs will be paid by Val Cor unless the
court  finds  that  one  or  more  Dissenting  Shareholders  acted  arbitrarily,
vexatiously or not in good faith in demanding payment, in which case some or all
court costs may be allocated to such  Dissenting  Shareholder  or  Shareholders.
Attorneys' and experts' fees may be assessed  against Val Cor if the court finds
that Val Cor did not comply with the  applicable  statute or acted  arbitrarily,
vexatiously  or not in good faith,  or such fees may be assessed  against one or
more Dissenting  Shareholders if the same acted arbitrarily,  vexatiously or not
in good faith.

    COMPANY  SHAREHOLDERS  CONSIDERING  SEEKING  APPRAISAL BY  EXERCISING  THEIR
DISSENTERS'  RIGHTS SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR COMPANY  COMMON
STOCK  DETERMINED  UNDER  COLORADO LAW COULD BE MORE THAN,  THE SAME AS, OR LESS
THAN THEIR PRO RATA SHARE OF THE MERGER  CONSIDERATION THAT THEY ARE ENTITLED TO
RECEIVE UNDER THE PLAN OF  REORGANIZATION IF THEY DO NOT SEEK APPRAISAL OF THEIR
COMPANY COMMON STOCK.


                                       23

<PAGE>



    The foregoing is not a complete  statement of the  procedures to be followed
by Company shareholders desiring to exercise dissenters' rights. The exercise of
such rights requires strict adherence to the relevant provisions of the Colorado
Business Corporation Act. Therefore, each shareholder who may desire to exercise
dissenters'  rights is advised  individually  to consult the law (as provided in
Appendix B to this Proxy  Statement/Prospectus)  and  comply  with the  relevant
provisions thereof.  Company shareholders wishing to exercise dissenters' rights
are advised to consult  their own counsel to ensure that they fully and properly
comply with the requirements of Colorado law.

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION

    The Board of  Directors  of the Company  was aware of the various  interests
discussed below when it considered and approved the Plan of Reorganization.  The
Plan of Reorganization provides that after the Reorganization becomes effective,
James P. Oaks,  currently  president and chief executive  officer of the Company
and the Bank and Charles A. Oaks,  currently  executive  vice  president  of the
Bank,  will become  executive  officers of Vectra Bank.  Each will enter into an
employment  agreement with Vectra Bank  effective as of the Effective  Date. The
Plan of  Reorganization  also  provides  that the  Company  and the Bank may pay
bonuses to officers in connection with their  employment in 1998, but limits any
increase in aggregate bonus  compensation to 4.5% in excess of aggregate bonuses
paid in 1997. In this regard, the Messrs.  Oaks as well as other officers of the
Bank will receive  their bonus  payments at the  Effective  Date.  Additionally,
Vectra Bank has agreed to assume the obligations of the Bank under the Executive
Employee Salary Continuation Agreements dated December 19, 1992 between the Bank
and the Messrs. Oaks.

    The terms of  employment  under these  employment  agreements  will continue
until  the  third  anniversary  of  the  commencement  of  the  agreements.  The
agreements  provide  that Mr.  James Oaks will receive a salary of not less than
$95,000  per year and Mr.  Charles  Oaks will  receive a salary of not less than
$83,000 per year. The Messrs.  Oaks will be eligible to be considered for salary
increases, upon review, and will be entitled to other benefits normally afforded
executive employees,  including employee benefit plan participation,  retirement
and life insurance policies. During the term of employment,  Mr. James Oaks will
have  exclusive use of an automobile  which the Bank purchased for his use as of
October 29, 1996; Mr. Oaks will be responsible for all expenses of ownership and
use of the automobile,  subject to reimbursement for reasonable travel and other
expenses  incurred  or  paid  by him  for  business  use.  During  the  term  of
employment,  Vectra  Bank will also  reimburse  Mr.  James Oaks for dues for his
country club membership.

    The  employment  agreements  provide for severance  benefits for the Messrs.
Oaks upon the termination of their respective  employment agreements for reasons
other than  completion of their  employment  terms,  their  resignations,  their
deaths  or  disabilities,  or  "for  cause"  (as  defined  in  their  employment
agreements).  In the event of termination for reasons other than those described
in the preceding sentence, the Messrs. Oaks will receive their salaries (as


                                       24

<PAGE>



defined in their employment agreements) payable at the rate established in their
respective  employment  agreements  for the  year in which  termination  occurs,
payable until the third  anniversary of the commencement of the agreements.  The
Messrs. Oaks will also receive such rights as have accrued as of the termination
date of their  employment  under the terms of any plans or arrangements in which
they  participate,  reimbursement  for expenses  accrued as of such  termination
date, and the cash  equivalent of paid annual leave and sick leave accrued as of
such termination date.

    Under their employment agreements, the Messrs. Oaks have agreed that, during
the term of their  employment  and until the second  anniversary  of the date of
termination of their employment by Vectra Bank under the employment  agreements,
they will not (i) engage in the banking  business  other than on behalf of Zions
or Vectra Bank or their affiliates  within the market area of E1 Paso and Teller
Counties,  Colorado; (ii) directly or indirectly own, manage, operate,  control,
be employed by, or provide management or consulting  services in any capacity to
any firm, corporation, or other entity (other than Zions or Vectra Bank or their
affiliates)  engaged in the  banking  business  in such  market  area;  or (iii)
directly or indirectly  solicit or otherwise  intentionally  cause any employee,
officer,  or member of the respective  Boards of Directors of Vectra Bank or any
of its affiliates to engage in any action prohibited under (i) or (ii) above.

    The Plan of  Reorganization  further provides that after the  Reorganization
becomes  effective,  Dale L.  Duncan,  currently  chairman  of the  board  and a
director of both the Company  and the Bank and a  principal  shareholder  of the
Company, will enter into a non-competition  agreement with Vectra Bank effective
as of the  Effective  Date.  Under his  agreement,  Mr.  Duncan has agreed that,
during the term of three years from the  commencement of the agreement,  he will
not (i) engage in the banking  business  other than on behalf of Zions or Vectra
Bank or their affiliates within the prescribed market area of E1 Paso and Teller
Counties in Colorado; (ii) directly or indirectly own, manage, operate, control,
be employed by or provide  management or consulting  services in any capacity to
any firm,  corporation or other entity (other than Zions or Vectra Bank or their
affiliates)  engaged in the  banking  business  in such  market  area;  or (iii)
directly or indirectly  solicit or otherwise  intentionally  cause any employee,
officer or member of the respective boards of directors of Vectra Bank or any of
its affiliates to engage in any action prohibited under (i) or (ii) above.

    Upon the Effective Date of the Reorganization, the Company and the Bank will
pay bonuses in  connection  with 1998  service to various of the officers of the
Company and the Bank,  including the Messrs.  Oaks.  The Plan of  Reorganization
limits such bonuses  (together with any other bonuses paid with respect to 1998)
to not more  than  4.5% in excess of the  aggregate  bonuses  paid in 1997.  The
Company and the Bank paid an  aggregate  of $102,000 in bonuses in 1997 to their
officers,  including  $34,000 to Mr. James Oaks and $29,000 to Mr. Charles Oaks.
The Company and the Bank anticipate  paying bonuses for 1998 services and expect
that all 1998  bonuses  will  exceed  the 1997  bonuses  by the  permitted  4.5%
increase.  Bonuses  paid for 1998 will be  limited  to that  period  of  service
during 1998 prior to the Effective Date of the Reorganization.

                                       25


<PAGE>



    Upon  consummation  of the  Reorganization,  Vectra  Bank  will  assume  the
obligations  of the Bank  under  the  Executive  Employees  Salary  Continuation
Agreements which the Messrs. Oaks entered into in 1992. Under the agreements the
Bank undertook to provide  retirement income for Mr. James Oaks in the amount of
$54,700 per year and Mr.  Charles  Oaks in the amount of $37,200  per year.  The
duration  of each  retirement  benefit is for  lifetime,  with a  thirteen  year
certain benefit to the individual's beneficiaries should the individual not live
thirteen  years after  normal  retirement.  If the  individual  elects the early
retirement  option,  then the benefit is only a thirteen year certain benefit to
the individual or his beneficiaries.  Under the agreements, Vectra Bank will pay
the Messrs.  Oaks monthly retirement benefits for life (or a minimum of thirteen
years)  commencing  on  their  respective  retirement  dates,  unless  (a)  they
voluntarily  terminate their employment within three years in violation of their
Employment  Agreements,  or (b) are  discharged  for cause.  The  Messrs.  Oaks'
survivors will also receive  survivorship  benefits under certain conditions set
forth in these agreements.  If the Messrs. Oaks incur a voluntary or involuntary
termination of employment prior to reaching the early retirement date defined in
these  agreements,  for reasons other than death,  disability,  or discharge for
cause,  subsequent to the change in ownership or control to Vectra Bank,  Vectra
Bank shall pay to the executive,  on his normal  retirement date, the respective
defined  benefit for the life of the executive,  but in any event for a thirteen
year certain period, to the executive or the executive's  beneficiary.  In 1992,
the Bank purchased  insurance policies to cover its financial  obligations under
the  agreements.  As owner of the insurance  policies,  the Bank,  and after the
Reorganization   Vectra  Bank,  will  receive  all  insurance  proceeds  of  the
respective  policies upon the death of Mr. James Oaks  ($400,000) or Mr. Charles
Oaks ($275,000), either prior to or during the thirteen year retirement period.

INCONSISTENT ACTIVITIES

    The Company and the Bank have agreed that until the Holding  Company  Merger
has been  consummated  or the Plan of  Reorganization  has  been  terminated  in
accordance with its terms,  neither the Company nor the Bank will (i) solicit or
encourage any inquiries or proposals by any third person to acquire more than 1%
of the Company Common Stock or any capital stock of the Bank or any  significant
portion of the Company's or the Bank's assets (whether by tender offer,  merger,
purchase  of assets or  otherwise);  (ii)  afford any third  party  which may be
considering  any such  transaction  access to its  properties,  books or records
except as  required  by law;  (iii)  enter into any  discussions,  negotiations,
agreement  or  understanding  with  respect  to any  such  transaction;  or (iv)
authorize or permit any of its  directors,  officers,  employees or agents to do
any of the  foregoing.  If the Company or the Bank becomes aware of any offer or
proposed  offer to acquire any of its shares or any  significant  portion of its
assets  or of any  other  matter  which  could  adversely  affect  the  Plan  of
Reorganization,  the Holding Company Merger, or the Bank Merger,  the Company is
required to give immediate notice thereof to Zions and to keep Zions informed of
the matter.

CONDUCT OF BUSINESS PENDING THE REORGANIZATION

    The  Plan  of  Reorganization   contains   covenants,   representations  and
warranties  by the  Company  and the Bank as to  matters  which are  typical  in
transactions similar to the Reorganization.

                                       26


<PAGE>



    Prior to the Effective  Date, the Company and the Bank have each agreed that
neither will without Zions' prior written  consent:  (i) declare or pay any cash
dividends or property  dividends with respect to any class of its capital stock;
(ii)  declare or  distribute  any stock  dividend,  authorize  any stock  split,
authorize,  issue  or make  any  distribution  of its  capital  stock  or  other
securities  except for the issuance of Company  Common Stock already  subscribed
for or upon exercise of existing stock options, or grant any  options to acquire
such  securities;  (iii) except as contemplated  by the Plan of  Reorganization,
merge into,  consolidate  with or sell its assets to any other person,  or enter
into any other  transaction or agree to effect any other  transaction not in the
ordinary course of its business or engage in any  discussions  concerning such a
possible transaction;  (iv) convert the charter or form of entity of the Bank to
any other charter or form of entity; (v) make any direct or indirect redemption,
purchase  or other  acquisition  of any of its  capital  stock;  (vi)  incur any
liability or obligation, make any commitment or disbursement, acquire or dispose
of any  property  or asset,  make any  agreement  or engage in any  transaction,
except  in  the  ordinary  course  of its  business;  (vii)  subject  any of its
properties or assets to any lien, claim, charge,  option or encumbrance,  except
in the  ordinary  course  of its  business;  (viii)  institute  or  agree to any
increase in the compensation of any employee,  except for ordinary  increases in
accordance  with  past  practices  which  (a)  result  from  payments  under any
arrangement in effect as of January 1, 1998 for the payment of commissions,  (b)
in the case of any other salary  increase,  do not exceed (when  aggregated with
all other such salary  compensation  excluding  commissions) 104.5% per annum of
the aggregate salary compensation as of January 1, 1998, or (c) in the. case off
bonus  compensation,  do not exceed (when  aggregated  with all other such bonus
compensation)  104.5% per annum of the aggregate bonus compensation  expense for
1997; (ix) create or modify any pension or profit-sharing plan, bonus,  deferred
compensation,  death benefit or retirement  plan, or the level of benefits under
any such plan, or increase or decrease any severance or termination  pay benefit
or any other fringe benefit;  (x) enter into any employment or personal services
contract   with  any  person  or  firm   except  to  directly   facilitate   the
Reorganization;  nor (xi)  purchase  any loans or  loan-participation  interests
from,  or  participate  in any loan  originated  by, any  person  other than the
Company or the Bank, except (a) loans or loan-participation interests originated
by  Piedmont  Funding  Corporation  and (b) other  loans or loan-  participation
interests  which,  when  aggregated  with all other such loans and extensions of
credit  outstanding from the Company and the Bank (taken as a whole) to the same
"borrower" (as: defined), do not exceed $200,000.

    The Company and the Bank have also agreed to carry on their,  businesses and
manage  their  assets and  property  diligently  in the same manner as they have
previously  done and to use  their  best  efforts  to  preserve  their  business
organization.  Pending  completion of the  Reorganization  or termination of the
Plan of  Reorganization,  the Company and the Bank have agreed to provide  Zions
with certain information and reports and access to other information.

CONDITIONS TO THE REORGANIZATION

    The obligations of the parties to consummate the  Reorganization are subject
to, among other things,  the satisfaction of the following  conditions:  (i) the
parties  shall  have  received  all  orders,  consents  and  approvals  from all
requisite  governmental  authorities  for the completion of the  Reorganization;
(ii) certain litigation seeking to restrain or prohibit the Reorganization,

                                       27
<PAGE>



as more  fully  specified  in the Plan of  Reorganization,  shall  not have been
instituted or threatened;  (iii) the registration statement filed by Zions under
the Securities Act in connection  with the  registration  of the shares of Zions
Common  Stock  which  will be used  as  consideration  in  connection  with  the
Reorganization  shall have become  effective under the Securities Act, and Zions
shall have  received  all  required  state  securities  laws  permits  and other
required  authorizations  or confirmations of the availability of exemption from
registration   requirements  necessary  to  issue  Zions  Common  Stock  in  the
Reorganization,  and neither the  Registration  Statement  nor any such required
permit,  authorization  or  confirmation  shall be  subject to a  stop-order  or
threatened  stop-order by the SEC or any state  securities  authority;  (iv) the
Company and Zions shall have  received a written  opinion  from tax counsel that
the Reorganization shall qualify as a tax free reorganization under the Code and
the regulations and rulings  promulgated  thereunder;  and (v) there shall be no
adverse  legislation or government  regulation which would make the contemplated
transaction impossible.

    The  obligations  of  Zions,  Val Cor and  Vectra  Bank  to  consummate  the
Reorganization  are  subject to  satisfaction  or waiver of  certain  additional
conditions, including: (i) the shareholders of the Company shall have authorized
the Holding Company Merger;  (ii) all representations and warranties made by the
Company and the Bank in the Plan of Reorganization  shall be true and correct in
all material  respects on the Effective  Date and the Company and the Bank shall
have  performed  all  of  their  respective   obligations   under  the  Plan  of
Reorganization  on or prior to the Effective Date; (iii) Hendricks,  Hendricks &
Shakes, P.C., legal counsel to the Company,  shall have rendered a legal opinion
to Zions in form and substance as provided in the Plan of  Reorganization;  (iv)
Daniel P. Edwards,  P.C.,  legal  counsel to the Company,  shall have rendered a
legal  opinion  to  Zions  in form  and  substance  as  provided  in the Plan of
Reorganization;  (v)  litigation  counsel for the Company  shall have rendered a
legal  opinion  to  Zions  in form  and  substance  as  provided  in the Plan of
Reorganization;  (vi) the Company shall have  delivered to Zions all  regulatory
authorizations  entitling  the Bank to operate its  branches;  (vii)  during the
period from  December 31, 1997 to the Effective  Date,  there shall have been no
material  adverse  change in the financial  position or results of operations of
the  Company or the Bank nor shall the  Company or the Bank have  sustained  any
material loss or damage to its properties which  materially  affects its ability
to conduct its business; (viii) on and as of the Effective Date the consolidated
net worth of the Company as  determined in accordance  with  generally  accepted
accounting  principles  shall not be less than the sum of (a) $7,701,639 and (b)
the aggregate  contributions to capital caused by the payments  accompanying the
exercise of any stock options on or after  December 31, 1997;  (ix) on and as of
the  Effective  Date,  the  aggregate  reserve  for loan  losses  of the Bank as
determined in accordance with generally accepted accounting principles shall not
be less than  $670,028;  (x) the CRA  rating of the Bank  shall be no lower than
"satisfactory"; (xi) Messrs. James Oaks and Charles Oaks shall have entered into
employment  agreements  with  Vectra  Bank in the form  provided  in the Plan of
Reorganization;   (xii)   Zions  shall  have   received  an  opinion   that  the
Reorganization  contemplated by the Plan of  Reorganization  will be treated for
accounting  purposes as a "pooling of interests" in accordance  with APB Opinion
No. 16 (unless  share  repurchases  by Zions make the receipt of such an opinion
impracticable);  (xiii) the  president  and chief  executive  officer  and chief
financial  officer,  of each of the Company and the Bank shall have  delivered a
certificate to Zions regarding  various pooling o[ interests  issues;  (xiv) the
Directors Examination of the Bank by William-Thomas Associates as of

                                       28


<PAGE>



December 31, 1997 shall have been completed,  and no material  adverse change to
the financial condition of the Company or the Bank shall have been revealed, nor
shall any material  adjustments to the financial  accounts of the Company or the
Bank have been recorded,  as a result of the examination;  (xv) Zions shall have
received a written  agreement from each  "affiliate" of the Company not to sell,
pledge or  otherwise  dispose of his or her shares of  Company  Common  Stock or
Zions  Common  Stock  for  specified  periods  prior  to and  subsequent  to the
Effective Date and except in compliance  with the  applicable  provisions of the
Securities  Act;  (xvi) Mr.  Duncan shall have  entered  into a  non-competition
agreement  with Vectra Bank in the form provided in the Plan of  Reorganization;
(xvii) the contract  between the Bank and its data processing  service  provider
shall have been  amended  to provide  for the  continuation  of data  processing
services  to the Bank  for a  period  of not less  than  six  months  after  the
Effective Date, at a cost reasonably  acceptable to Zions;  and (xviii) Mountain
National Bank Service  Company shall have been dissolved  prior to the Effective
Date without material financial consequence to the Company.

    The obligations of the Company and the Bank to consummate the Reorganization
are  subject to the  satisfaction  or waiver of certain  additional  conditions,
including:  (i) all  representations  and warranties made by Zions,  Val Cor and
Vectra  Bank in the Plan of  Reorganization  shall be true  and  correct  in all
material respects on the Effective Date and Zions, Val Cor and Vectra Bank shall
have  performed  all  of  their  respective   obligations   under  the  Plan  of
Reorganization  on or prior to the Effective  Date;  (ii) the Company shall have
received a legal  opinion of Duane,  Morris & Heckscher  LLP,  legal  counsel to
Zions,  in form and substance as provided in the Plan of  Reorganization;  (iii)
during the period from December 31, 1997 to the Effective Date, there shall have
been no  material  adverse  change  in the  financial  position  or  results  of
operations  of Zions nor shall Zions have  sustained any material loss or damage
to its properties which materially  affects its ability to conduct its business;
and (iv) Zions Common Stock shall be quoted on the Nasdaq NMS or shall be listed
on a national securities exchange.

REPRESENTATIONS AND WARRANTIES

    The  representations  and warranties of the parties contained in the Plan of
Reorganization relate, among other things, to the organization and good standing
of the parties;  the  capitalization  of the parties;  the  authorization by the
parties of the Plan of  Reorganization  and the absence of conflict with laws or
other agreements to which the respective  parties are subject;  the accuracy and
completeness of the financial statements and other information  furnished to the
other party; the absence of material  adverse changes in the condition,  assets,
properties  or  businesses  since  December 31, 1997 with respect to Zions,  the
Company  and the Bank;  the absence of  undisclosed  material  liabilities;  and
compliance with laws. The Company has additionally warranted that since December
31,  1997  there  has  been no  material  deterioration  in the  quality  of its
consolidated loan portfolio and no material  increase in the consolidated  level
of  its  nonperforming  assets  or  non-accrual  loans  or in the  level  of its
consolidated  provision  for  credit  losses  or its  consolidated  reserve  for
possible  credit losses.  The Company has also  warranted that its  consolidated
reserve for possible credit losses is adequate to absorb reasonably  anticipated
losses in the consolidated loan and lease portfolios of the Company.


                                       29

<PAGE>



    The parties have  additionally  warranted that they do not know of any facts
which reasonably might  materially  adversely affect the respective  businesses,
assets, liabilities,  financial condition, results of operations or prospects of
the  Company,  the Bank,  Zions,  Val Cor or  Vectra  Bank  which  have not been
disclosed in the financial  statements  or a certificate  delivered to the other
party.

AMENDMENT AND WAIVER

    Notwithstanding  prior approval by the shareholders of the Company or Vectra
Bank,  the Plan of  Reorganization  may be  amended  in any  respect  by written
agreement  between the parties,  except that after such shareholder  approval no
amendment  may  prejudice  the  economic  interests of the  shareholders  of the
Company or Vectra Bank unless shareholder approval of the amendment is procured.
Zions or the Company may also,  at any time prior to the Effective  Date,  waive
any  condition  or  term of the  Plan  of  Reorganization,  unless  the  term or
condition is required by law,  provided  that any such waiver must be in writing
signed by the party  entitled to such benefit and will be  permitted  only if it
will not have a materially  adverse  effect on the benefits  intended  under the
Plan of Reorganization to its shareholders.

AUTHORIZED TERMINATION AND DAMAGES FOR BREACH

    The Plan of Reorganization may be terminated and abandoned at any time prior
to the  Effective  Date,  notwithstanding  approval of the  shareholders  of the
Company,  as  follows:  (i) by  mutual  consent  of the  parties  to the Plan of
Reorganization;  (ii) unilaterally,  by Zions if any of the  representations and
warranties of the Company or the Bank was  materially  incorrect when made or in
the event of a material breach or material failure by the Company or the Bank of
any covenant or  agreement  of the Company or the Bank  contained in the Plan of
Reorganization  which has not been, or cannot be, cured within thirty days after
written notice has been given; (iii) unilaterally, by the Company if any, of the
representations  and warranties of Zions,  Val Cor or Vectra Bank was materially
incorrect when made or in the event of a material breach or material  failure by
Zions,  Val Cor or Vectra Bank of any covenant or agreement of Zions, Val Cor or
Vectra  Bank  contained  in the Plan of  Reorganization  which has not been,  or
cannot be, cured within thirty days after written notice has been given; (iv) by
either the Company or Zions if the board of directors  of either has  determined
in good  faith  that the  Holding  Company  Merger  has  become  inadvisable  or
impracticable by reason of federal or state litigation to restrain or invalidate
the transactions contemplated by the Plan of Reorganization; or (v) by any party
on or after January 31, 1999 if the Effective Date has not occurred on or before
that date.

    If either party  terminates  the Plan of  Reorganization  because any of the
representations and warranties of a party was materially incorrect when made, or
because of a material  breach or  material  failure by a party of a covenant  or
agreement  made  under  the  Plan  of  Reorganization,  then  such  party  whose
representations  and  warranties  were  materially  incorrect or who  materially
breached or failed to perform its covenant or  agreement  shall be liable to the
other party or parties to the Plan of  Reorganization  not affiliated with it in
the amount of $500,000.


                                       30

<PAGE>



RESTRICTIONS ON RESALES BY COMPANY AFFILIATES

    In general, Company shareholders who receive Zions shares as a result of the
Reorganization will be able to sell such shares freely and without  restriction.
However,  directors and executive  officers of the Company and  shareholders who
own 10% or more of the Company Common Stock are considered  "affiliates"  of the
Company and are subject to  restrictions  on the sales of shares received in the
Reorganization.  Accordingly,  those  shareholders will not be permitted to sell
their  shares  of Zions  Common  Stock  acquired  in the  Reorganization  except
pursuant to (i) an effective  registration  statement  under the Securities Act;
(ii) the provisions of Rules 144 and 145 under the  Securities  Act; or (iii) an
exemption from the registration requirements of the Securities Act.

    Additionally, to ensure the Reorganization may be accounted for as a pooling
of interests,  the Company's affiliates will not be permitted to sell any shares
of Company Common Stock or Zions Common Stock during the 30 day period preceding
the  Effective  Date,  nor will they be  permitted  to sell any  shares of Zions
Common Stock  following the Effective Date until such time as financial  results
covering at least 30 days of post-Holding Company Merger combined operations are
published by Zions.  The management of the Company will notify those persons who
it  believes  may  be  deemed  to  be   affiliates   subject  to  the  foregoing
restrictions.  The Plan of  Reorganization  requires the Company to use its best
efforts to have each  affiliate  of the Company  sign an agreement to limit that
affiliate's  ability  to effect  any such  sales.  Zions  may place  restrictive
legends  on  certificates   representing   Zions  Common  Stock  issued  in  the
Reorganization  to all  persons  who  are  deemed  affiliates  under  Rule  145.
Appropriate  stop transfer  instructions  may be given to the transfer agent for
such certificates.

EXPENSES

    Each  party  to the  Plan of  Reorganization  will  pay  its  own  expenses,
including those of its own counsel,  accountants,  and tax advisors, incurred in
connection  with the Plan of  Reorganization.  The Company  will pay the cost of
printing and delivering  this Proxy  Statement/Prospectus  and other material to
the Company  shareholders.  Zions will pay the costs attributable to registering
its stock issuable under this Proxy Statement/Prospectus under federal and state
securities  laws.  The  Company  will pay the cost of the Duane  Morris  Opinion
concerning the federal income tax consequences of the Reorganization.

GOVERNMENT APPROVALS

    Applications   for  approval   (or   requests  for  waiver  of   application
requirements) of the Reorganization  must be made to, and approvals and consents
must be obtained  from,  appropriate  federal,  Utah,  and Colorado  regulators,
including  the Board of Governors of the Federal  Reserve  System or the Federal
Reserve  Bank of San  Francisco  acting under  authority  delegated to it by the
Board of Governors of the Federal  Reserve System  (collectively,  the "Board of
Governors"),  the Office of the Comptroller of the Currency (the "Comptroller"),
the   Commissioner  of  Financial   Institutions  of  the  State  of  Utah  (the
"Commissioner"),  and the  Colorado  State  Banking  Board (the  "State  Banking
Board"). Submissions have been made to


                                       31

<PAGE>



each of these regulatory authorities.  Federal law prohibits consummation of the
Reorganization  until thirty days after the approvals of the federal  regulators
have  been  obtained,  except  that  this  period  may  be  shortened  with  the
concurrence  of  the  Attorney  General  of the  United  States.  The  requisite
regulatory approvals have been obtained.

EFFECTIVE DATE OF THE REORGANIZATION

    If the  Plan  of  Reorganization  is  approved  by the  shareholders  of the
Company, the parties expect that the Reorganization will become effective in the
fourth  quarter  of  1998.  However,   as  noted  above,   consummation  of  the
Reorganization is subject to the satisfaction of a number of conditions, some of
which cannot be waived.  There can be no assurance  that all  conditions  to the
Reorganization  will be satisfied or, if satisfied,  that they will be satisfied
in time to permit the  Reorganization  to become effective in the fourth quarter
of 1998.  In  addition,  as also noted  above,  the parties  retain the power to
abandon the  Reorganization  or to extend the time for performance of conditions
or obligations necessary to its consummation,  notwithstanding prior shareholder
approval.

ACCOUNTING TREATMENT

    The parties  expect that the  Reorganization  will be treated for accounting
purposes as a "pooling of interests"  in  accordance  with APB Opinion No. 16. A
condition to consummation of the Plan of Reorganization is that Zions shall have
received  an  opinion  that the  Reorganization  will be treated as a pooling of
interests,  and  certificates  to  the  various  pooling  issues  signed  by the
president and chief executive officer and chief financial officer of each of the
Company and the Bank.  The pooling of interests  method of accounting  views the
Reorganization  as a uniting  of the  separate  ownership  interests  through an
exchange of shares. As such, the pro forma financial information  represents the
combined  historical  financial  data of Zions and the Company,  subject only to
certain adjustments described in the notes to the data presented.

RELATIONSHIP BETWEEN ZIONS AND THE COMPANY

    Neither Zions nor the Company is aware of any material  relationship between
Zions,  its  directors or officers or their  affiliates,  and the  Company,  its
directors or executive  officers or their affiliates,  except as contemplated by
the Plan of Reorganization or as described in this Proxy Statement/Prospectus.

                           SUPERVISION AND REGULATION

    The  information  contained  in  this  section  summarizes  portions  of the
applicable  laws and  regulations  relating to the supervision and regulation of
Zions and its  subsidiaries.  These  summaries  are not  complete,  and they are
qualified  in  their  entirety  by  reference  to the  particular  statutes  and
regulations described.


                                       32

<PAGE>



ZIONS

    Zions is a bank  holding  company  within the  meaning  of the Bank  Holding
Company Act and is  registered  as such with the Board of  Governors.  Under the
current terms of that Act,  Zions'  activities,  and those of companies which it
controls or in which it holds more than 5% of the voting  stock,  are limited to
banking or managing or controlling banks or furnishing services to or performing
services  for its  subsidiaries,  or any  other  activity  which  the  Board  of
Governors  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 Board of  Governors  is required  to  consider  whether the
performance of such activities by a bank holding company or its subsidiaries can
reasonably  be  expected  to  produce  benefits  to the  public  such as greater
convenience, increased competition or gains in efficiency that outweigh possible
adverse effects,  such as undue concentration of resources,  decreased or unfair
competition, conflicts of interest or unsound banking practices.

    Bank holding companies, such as Zions, are required to obtain prior approval
of the Board of  Governors to engage in any new activity or to acquire more than
5% of any class of voting stock of any company. Under the Riegle-Neal Interstate
Branching and Efficiency Act of 1994, as amended ("Riegle-Neal Act"), subject to
approval by the Board of Governors,  bank holding  companies  are  authorized to
acquire either control of, or substantial  assets of, a bank located outside the
bank  holding   company's  home  state.   These   acquisitions  are  subject  to
limitations,  the most significant of which include adequate  capitalization and
management of the acquiring bank holding company, existence of the acquired bank
for up to five years before  purchase where required under state law,  existence
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 more stringent deposit  concentration limits, so long as those
limits  apply  to all  bank  holding  companies  equally.  The  Riegle-Neal  Act
reaffirms  the right of  states to  segregate  and tax  separately  incorporated
subsidiaries of a bank or bank holding company. The Riegle-Neal Act also affects
interstate branching and mergers. See "Interstate Banking" below.

    The Board of Governors is authorized to adopt regulations a fleeting various
aspects of bank holding companies.  Under the general  supervisory  authority of
the Bank  Holding  Company  Act and  directives  provided  in the  International
Lending  Supervision  Act of 1983,  the Board of Governors  has adopted  capital
adequacy guidelines prescribing both risk-based capital and leverage ratios.

REGULATORY CAPITAL REQUIREMENTS

    Risk-Based  Capital  Guidelines.  The  Board of  Governors  has  established
risk-based capital guidelines for bank holding companies.  The guidelines define
Tier 1  Capital  and  Total  Capital.  Tier 1 Capital  consists  of  common  and
qualifying  preferred  shareholders'  equity and  minority  interests  in equity
accounts of consolidated subsidiaries,  less goodwill and 50% (and in some cases
up to 100%) of investment in unconsolidated subsidiaries. Total Capital consists


                                       33

<PAGE>



of Tier 1 Capital plus qualifying  mandatory  convertible debt,  perpetual debt,
certain hybrid capital  instruments,  certain  preferred stock not qualifying as
Tier 1 Capital,  subordinated  and other  qualifying  term debt up to  specified
limits,  and a portion of the allowance for credit losses,  less  investments in
unconsolidated  subsidiaries  and in  other  designated  subsidiaries  or  other
associated  companies  at the  discretion  of the  Board of  Governors,  certain
intangible  assets, a portion of limited-life  capital  instruments  approaching
maturity and reciprocal holdings of banking  organizations' capital instruments.
The Tier 1 component must constitute at least 50% of qualifying Total Capital.

    Risk-based  capital  ratios are calculated  with reference to  risk-weighted
assets,  which include both on-balance  sheet and off- balance sheet  exposures.
The risk-based  capital framework  contains four risk weight categories for bank
holding  company  assets -- 0%, 20%, 50% and 100%.  Zero  percent  risk-weighted
assets include,  generally, cash and balances due from federal reserve banks and
obligations  unconditionally  guaranteed by the U.S. government or its agencies.
Twenty percent risk-weighted assets include, generally, claims on U.S. banks and
obligations  guaranteed by U.S. government sponsored agencies as well as general
obligations  of states or other  political  subdivisions  of the United  States.
Fifty percent  risk-weighted assets include,  generally,  loans fully secured by
first liens on one-to-four  family  residential  properties,  subject to certain
conditions.  All assets not included in the foregoing categories are assigned to
the 100%  risk-weighted  category,  including  loans  to  commercial  and  other
borrowers.  As of year-end 1992, the minimum required ratio for qualifying Total
Capital became 8%, of which at least 4% must consist of Tier 1 Capital.  At June
30,  1998,  Zions'  Tier 1 and Total  Capital  ratios  were  13.51% and  16.90%,
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 percent
or $1 billion or more of the assets of such  organization.  Such an organization
(unless   exempted  by  the  banking   regulators)  and  certain  other  banking
organizations   designated  by  the  banking  regulators  must  include  in  its
risk-based capital ratio analysis charges for, and hold capital against, general
market risk of all positions held in its trading account and of foreign exchange
and commodity  positions  wherever located,  as well as against specific risk of
debt and equity positions located in its trading account.  Currently, Zions does
not calculate a risk-based capital charge for its market risk.


                                       34

<PAGE>



    The following table presents Zions' regulatory  capital position at June 30,
1998 under the risk-based capital guidelines.

RISK-BASED CAPITAL (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                              Percent   
                                                                                              of Risk-  
                                                                                              Adjusted  
                                                                    Amount                    Assets    
                                                                    ------                    ------    
                                                                                                        
<S>                                                               <C>                         <C>     
Tier 1 Capital .............................                       $   943,769                 13.51%  
Minimum Requirement ........................                           279.504                  4.00    
                                                                   -----------                ------    
 Excess ....................................                       $   664,265                  9.51%   
Total Capital ..............................                       ===========                ======   
Minimum Requirement ........................                                                          
 Excess ....................................                       $ 1,181,221                 16.90%  
                                                                       559,007                  8.00    
                                                                   -----------                ------    
                                                                   $   622,214                  8.90%   
                                                                   ===========                ======    
Risk-Adjusted Assets, 
net of goodwill, excess deferred 
tax assets and excess allowance ............                       $ 6.987.589                100.00%
                                                                   ===========                ======
</TABLE>

    Minimum Leverage Ratio. The Board of Governors has adopted capital standards
and leverage capital guidelines that include a minimum leverage ratio of 3% Tier
1 Capital to total assets (the "leverage ratio").  The leverage ratio is used in
tandem with a  risk-based  ratio of 8% that took  effect at the end of 1992.  At
June 30, 1998, Zions' leverage ratio was 8.06%.

    The Board of Governors 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 Board
of Governors  has  indicated  that it will  consider a "tangible  Tier 1 Capital
Leverage  Ratio"  (deducting  all  intangibles)  and other  indices  of  capital
strength in evaluating proposals for expansion or new activities.

    The  following  table  presents  Zions'  leverage  ratio at June 30, 1998. A
leverage  ratio of 3% will be the minimum  required  for the most  highly  rated
banking  organizations,  and according to the Board of Governors,  other banking
organizations would be expected to maintain capital at higher levels.

                                       35



<PAGE>
                                        (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                     Percent 
                                                                     of Average
                                                                     Assets, Net 
                                                          Amount     of Goodwill 
                                                          ------     ----------- 
                                          


<S>                                                 <C>                 <C>   
Tier 1 Capital .............................          $    943,769        8.06% 
Minimum Requirement ........................               351,161        3.00  
                                                      ------------      ------ 
 
Excess .....................................          $    592,608        5.06%
                                                      ============      ====== 

Average Assets, net of goodwill and  
deferred tax assets ........................          $ 11,705,366      100.00% 
                                                      ============      ======   
</TABLE>


    Other Issues and  Developments  Relating to Regulatory  Capital.  Under such
authority and directives  provided in the International  Lending Supervision Act
of 1983,  the  Comptroller,  the FDIC and the  Board of  Governors  have  issued
regulations  establishing the capital  requirements for banks under federal law.
The regulations,  which apply to Zions' banking subsidiaries,  establish minimum
risk-based  and  leverage  ratios  which  are  substantially  similar  to  those
applicable to Zions.

    The  Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991,  as
amended  ("FDICIA")  requires  the federal  banking  regulators  to take "prompt
corrective  action"  in  respect  of  banks  that do not  meet  minimum  capital
requirements  and imposes  certain  restrictions  upon banks which meet  minimum
capital  requirements  but are not "well  capitalized"  for  purposes of FDICIA.
FDICIA   establishes  five  capital  tiers:  "well   capitalized,"   "adequately
capitalized,"   "undercapitalized,"    "significantly   undercapitalized,"   and
"critically  undercapitalized."  Implementing regulations adopted by the federal
banking  agencies  define the capital  categories for banks which will determine
the necessity for prompt corrective  action by the federal banking  agencies.  A
bank may be placed in a capitalization  category that is lower than is indicated
by its capital position if it receives an unsatisfactory examination rating with
respect to certain matters,  except that it may not be categorized as critically
undercapitalized unless actually indicated by its capital position.

    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  critically  undercapitalized,
significantly  undercapitalized and certain  undercapitalized banks are required
to  obtain  the  approval  of the  Board  of  Governors  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

                                       36


<PAGE>



upon where the deposits are solicited).  Such banks and their holding  companies
are also required to obtain regulatory  approval prior to their hiring 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

    Under  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 and earnings,  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 impose other
operating restrictions.

    FDICIA  also  contains  provisions  which,  among  other  things,   restrict
investments  and activities as principal by state  nonmember  banks to those for
which national banks are eligible, impose limitations on deposit account balance
determinations  for  calculating  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 financing

                                       37


<PAGE>



construction of a building or other  improvements to real estate,  loans to bank
insiders,   regulatory   accounting  and  reports,   internal  control  reports,
independent audits, exposure on interbank liabilities,  contractual arrangements
under  which  institutions   receive  goods,   products  or  services,   deposit
account-related disclosures and advertising as well as to impose restrictions on
federal reserve discount window advances for certain institutions and to require
that insured depository institutions generally be examined on-site by federal or
state personnel at least once every 12 months.

    In connection  with an  institutional  failure or FDIC rescue of a financial
institution, the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA") grants to the FDIC the right, in many situations,  to charge its
actual or anticipated losses against commonly controlled depository  institution
affiliates  of the failed or rescued  institution  (although  not against a bank
holding company itself).

    The  nature of the  banking  and  financial  services  industry,  as well as
banking  regulation,   may  be  further  affected  by  various  legislative  and
regulatory  measures currently under  consideration.  The most important of such
measures include legislation  designed to permit increased  affiliations between
commercial   and   financial   firms    (including    securities    firms)   and
federally-insured banks, reduce regulatory burdens on financial institutions and
eliminate or revise the features of the specialized savings association charter.
It is  impossible  to predict  whether or in what form  these  proposals  may be
adopted in the future and, if adopted, what the effect of their adoption will be
on Zions or its subsidiaries.

DEPOSIT INSURANCE AND OTHER ASSESSMENTS

    Insured banks  (including  the bank  subsidiaries  of Zions) are required to
make quarterly deposit insurance  assessment payments to the Bank Insurance Fund
(the "BIF"), and most savings associations to the Savings Association  Insurance
Fund (the "SAIF"), under a risk-based assessment system established by the FDIC.
(In addition,  certain banks must also pay deposit insurance  assessments to the
SAIF and certain savings associations, to the BIF alone or to both funds.) Under
this system, each institution's  insurance  assessment rate is determined by 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.

                                       38


<PAGE>



    At June 30, 1998, both BIF- and SAIF-assessable  deposits were subject to an
assessment  schedule  providing  for an  assessment  range  of 0% to .27%  (with
intermediate rates of .03%, .10%, .17% and .24%, depending upon an institution's
supervisory  risk  group).  Both BIF and SAIF  assessment  rates are  subject to
semi-annual  adjustment  by the FDIC Board of Directors  within a range of up to
five basis points  without  public  comment.  The FDIC Board of  Directors  also
possesses authority to impose special assessments from time to time.

    In  addition  to the payment of deposit  insurance  assessments,  depository
institutions are required to make quarterly  assessment  payments to the FDIC on
both their BIF and SAIF assessable  deposits which will be paid to the Financing
Corporation,  established by the Federal Housing Finance Board under FIRREA,  to
enable it to pay interest and certain other expenses on bonds which it issued to
facilitate the resolution of failed savings associations. Under 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.  At June 30,
1998,  assessment  rates  were  set at  1.22  basis  points  annually  for  BIF-
assessable deposits and 6.10 basis points annually for SAIF-assessable deposits.

INTERSTATE BANKING

    Existing laws and various  regulatory  developments  have allowed  financial
institutions  to conduct  significant  activities on an  interstate  basis for a
number of years.  During recent years, a number of financial  institutions  have
expanded their out-of-state  activities and various states and the Congress have
enacted legislation intended to allow certain interstate banking combinations.

    The Riegle-Neal Act dramatically  affects interstate banking activities.  As
discussed  previously,  the  Riegle-Neal  Act allows the Board of  Governors  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 where  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 the branch offices of
the out-of-state bank to those of its own or, alternatively,  convert its branch
offices  to those of the  out-of-state  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,  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  and not  more  than 30% of the
deposits in


                                       39

<PAGE>



insured  depository  institutions  within  that  state.  States may impose  more
stringent  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.

    Under  FIRREA,  bank  holding  companies  may acquire  savings  associations
(including  savings and loan  associations  and federal  savings  banks) without
geographic restriction under the Bank Holding Company Act.

    Bank holding  companies  whose home state is Utah are  authorized to acquire
control of depository  institutions and depository institution holding companies
located in other states.  Colorado law authorizes an  out-of-state  bank holding
company,  with the prior  approval  of the State  Banking  Board,  to  acquire a
Colorado bank holding company whose operations are principally  conducted within
the  state  irrespective  of the  number  of years  the  depository  institution
subsidiaries  of the  Colorado  bank  holding  company  have  been in  operation
provided that at the time of acquisition,  the out-of-state bank holding company
will  not  control  more  than 25  percent  of the  aggregate  deposits  made in
federally-insured  banks, savings and loan associations,  federal savings banks,
industrial  banks,  bank  holding   companies,   thrift  holding  companies  and
industrial  bank  holding  companies  located  in the  state and  certain  other
requirements are satisfied.

                                MONETARY POLICY

    The earnings of Zions and the Company are directly  affected by the monetary
and fiscal policies of the federal  government and  governmental  agencies.  The
Board of Governors  has broad powers to expand and constrict the supply of money
and credit and to regulate  the reserves  which its member  banks must  maintain
based on deposits.  These broad powers are used to influence  the growth of bank
loans,  investments  and deposits,  and may affect the interest rates which will
prevail in the market for loans and investments and deposits.  Governmental  and
Federal  Reserve Board  monetary  policies have had a significant  effect on the
operating  results of commercial  banks in the past and are expected to do so in
the future.  The future  impact of such  policies and practices on the growth or
profitability of Zions and the Company cannot be predicted.

                                       40


<PAGE>



                  INFORMATION CONCERNING ZIONS BANCORPORATION

SELECTED FINANCIAL DATA

    The following  unaudited table of selected  financial data should be read in
conjunction  with the  related  notes  included  herein and Zions'  consolidated
financial  statements and the related notes thereto,  which are  incorporated by
reference in this Proxy Statement/Prospectus.  See "Zions Documents Incorporated
by Reference."

                                       41

<PAGE>

ZIONS BANCORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)





<TABLE>
<CAPTION>
                                                    AS OF, AND FOR THE SIX
                                                     MONTHS ENDED JUNE 30,
                                                  ---------------------------
                                                       1998          1997
                                                  ------------- -------------
<S>                                               <C>           <C>
EARNINGS SUMMARY
Taxable-equivalent net interest income ..........  $   235,378   $   188,704
Net interest income .............................      231,341       185,243
Noninterest income ..............................       91,100        69,930
Provision for loan losses .......................        6,741         3,710
Noninterest expenses(1) .........................      205,399       150,817
Income taxes ....................................       35,144        35,810
Income before cumulative effect of changes
 in accounting principles .......................       75,157        64,836
Cumulative effect of changes in
 accounting principles(2) .......................           --            --
Net income ......................................       75,157        64,836
COMMON STOCK DATA
Earnings per common share:
Income before cumulative effect of changes in
 accounting principles -- diluted ...............  $     1.03    $     0.91
Net income -- basic .............................        1.04          0.94
Net income -- diluted ...........................        1.03          0.91
Dividends declared per share ....................        0.26          0.23
Dividend payout ratio(%) ........................       25.01%        20.93%
Book value per share at period end ..............       12.32         10.13
Average common shares outstanding ...............   71,931,000    68,279,000
Weighted average common and common
 equivalent shares outstanding during period        73,037,000    70,436,000
Common shares outstanding at period end .........   75,033,242    69,562,253
AVERAGE BALANCE SHEET DATA
Money market investment .........................  $ 1,688,894   $ 1,622,619
Securities ......................................    2,906,621     2,558,495
Loan and leases, net ............................    5,831,128     4,641,846
Total interest-earning assets ...................   10,426,643     8,822,960
Total assets ....................................   11,430,048     9,580,772
Interest-bearing deposits .......................    6,028,136     4,551,467
Total deposits ..................................    7,979,270     5,956,348
FHLB advances and other borrowings over
 one year .......................................      145,817        75,523
Long-term debt ..................................      277,447       267,390
Total interest-bearing liabilities ..............    8,557,515     7,398,800
Shareholders' equity ............................      773,734       641,047
PERIOD END BALANCE SHEET DATA
Money market investments ........................  $ 1,241,097   $   831,176
Securities ......................................    3,128,036     2,974,116
Loans and leases, net ...........................    6,125,107     4,962,866
Allowance for loan losses .......................       96,043        86,869
Total assets ....................................   11,780,537     9,696,279
Total deposits ..................................    8,312,094     6,529,716
FHLB advances and other borrowings over
 one year .......................................      118,011       110,132
Long-term debt ..................................      386,243       263,246
Shareholders' equity ............................      924,645       704,498
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                             AS OF, AND FOR THE
                                                                           YEAR ENDED DECEMBER 31,
                                                  -------------------------------------------------------------------------
                                                       1997          1996           1995           1994           1993
                                                  ------------- -------------- -------------- -------------- --------------
<S>                                               <C>           <C>            <C>            <C>            <C>
EARNINGS SUMMARY
Taxable-equivalent net interest income ..........  $   358,676   $    296,372   $    238,880   $    203,313   $    178,636
Net interest income .............................      351,799        289,166        233,547        198,606        174,657
Noninterest income ..............................      143,167        114,270         88,811         73,202         79,880
Provision for loan losses .......................        6,175          4,640          3,000          2,181          2,993
Noninterest expenses(1) .........................      301,218        235,272        195,186        174,900        167,750
Income taxes ....................................       65,211         56,101         41,787         30,900         27,248
Income before cumulative effect of changes
 in accounting principles .......................      122,362        107,423         82,385         63,827         56,546
Cumulative effect of changes in
 accounting principles(2) .......................           --             --             --             --          1,659
Net income ......................................      122,362        107,423         82,385         63,827         58,205
COMMON STOCK DATA
Earnings per common share:
Income before cumulative effect of changes in
 accounting principles -- diluted ...............  $     1.89    $      1.68    $      1.37    $      1.09    $       .99
Net income -- basic .............................        1.92           1.70           1.39           1.11           1.03
Net income -- diluted ...........................        1.89           1.68           1.37           1.09           1.02
Dividends declared per share ....................        0.47           0.425         0.3525          0.29           0.245
Dividend payout ratio(%) ........................       23.20%         23.27%        24.95  %        27.06%         21.81%
Book value per share at period end ..............       10.25           8.72          7.46            6.28           5.50
Average common shares outstanding ...............   63,868,000     63,194,000     59,435,000     57,754,000     56,636,000
Weighted average common and common
 equivalent shares outstanding during period        64,629,000     63,787,000     60,013,000     58,404,000     57,120,000
Common shares outstanding at period end .........   63,962,100     63,468,480     62,773,280     58,238,208     56,805,468
AVERAGE BALANCE SHEET DATA
Money market investment .........................  $ 1,490,772   $    923,670    $   945,842   $    869,709   $    788,694
Securities ......................................    2,575,295      1,977,875      1,665,500      1,545,704      1,209,165
Loan and leases, net ............................    4,341,674      3,432,347      2,662,753      2,574,995      2,222,182
Total interest-earning assets ...................    8,407,741      6,333,892      5,274,095      4,990,408      4,220,041
Total assets ....................................    9,214,155      6,914,213      5,779,025      5,456,613      4,643,918
Interest-bearing deposits .......................    4,410,491      3,653,420      3,095,714      2,744,976      2,449,275
Total deposits ..................................    5,783,370      4,731,889      3,963,702      3,583,094      3,178,926
FHLB advances and other borrowings over
 one year .......................................      136,381         87,700         96,305        118,607        111,974
Long-term debt ..................................      257,779         55,187         57,506         59,493         75,623
Total interest-bearing liabilities ..............    7,067,324      5,208,318      4,397,582      4,197,865      3,556,746
Shareholders' equity ............................      615,535        512,739        407,498        339,181        286,331
PERIOD END BALANCE SHEET DATA
Money market investments ........................  $   814,088   $    613,429    $   687,251   $    403,446   $    597,680
Securities ......................................    2,712,094      1,983,643      1,694,669      1,663,433      1,258,939
Loans and leases, net ...........................    4,871,650      3,837,149      3,068,057      2,391,278      2,486,346
Allowance for loan losses .......................       80,481         76,803         73,437         67,018         68,461
Total assets ....................................    9,521,770      7,116,413      6,095,515      4,934,095      4,801,054
Total deposits ..................................    6,854,462      5,119,692      4,511,184      3,705,976      3,432,289
FHLB advances and other borrowings over
 one year .......................................      210,681         81,875         95,817        101,571        152,109
Long-term debt ..................................      258,566        251,620         56,229         58,182         59,587
Shareholders' equity ............................      655,460        544,610        469,678        365,770        312,592
</TABLE>

                                       42

<PAGE>

<TABLE>
<CAPTION>
                                                    AS OF, AND FOR THE SIX
                                                    MONTHS ENDED JUNE 30,
                                                   ------------------------
                                                       1998         1997
                                                   ------------ -----------
<S>                                                <C>          <C>
Nonperforming assets:
 Nonaccrual loans ................................  $  25,055      15,953
 Restructured loans ..............................        685         830
 Other real estate owned and other
  nonperforming assets ...........................      3,593       3,998
 Total nonperforming assets ......................     29,333      20,781
Accruing loans past due 90 days or more ..........     15,566       8,170
SELECTED RATIOS
Net interest margin(3) ...........................       4.55%       4.31%
Return on average assets .........................       1.33%       1.36%
Return on average common equity ..................      19.59%      20.40%
Ratio of average common equity to avg
 assets ..........................................       6.77%       6.69%
Tier 1 risk-based capital -- period end ..........      13.50%      13.69%
Total risk-based capital -- period end ...........      16.90%      15.83%
Leverage ratio -- period end .....................       8.06%       7.84%
Ratio of nonperforming assets to total
 assets -- period end ............................        .25%        .21%
Ratio of nonperforming assets to net loans
 and leases and other real estate owned and
 other nonperforming assets at period end.                .48%        .42%
Ratio of net charge-offs (recoveries) to aver-
 age loans and leases ............................        .13%        .18%
Ratio of allowance for loan losses to net
 loans and leases outstanding at period end              1.57%       1.75%
Ratio of allowance for loan losses to nonper-
 forming loans at period end .....................     373.13%     517.60%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                          AS OF, AND FOR THE
                                                                       YEAR ENDED DECEMBER 31,
                                                   ----------------------------------------------------------------
                                                       1997         1996         1995         1994         1993
                                                   ------------ ------------ ------------ ------------ ------------
<S>                                                <C>          <C>          <C>          <C>          <C>
Nonperforming assets:
 Nonaccrual loans ................................  $  11,907    $  12,704    $  10,875    $  13,635     $ 23,364
 Restructured loans ..............................        691          857          249          567        4,006
 Other real estate owned and other
  nonperforming assets ...........................      3,371          138        1,609        4,741        3,267
 Total nonperforming assets ......................     15,969       13,699       12,733       18,943       30,637
Accruing loans past due 90 days or more ..........      9,944        3,563        5,309        3,041       10,821
SELECTED RATIOS
Net interest margin(3) ...........................       4.27%        4.68%        4.53%        4.07%        4.23%
Return on average assets .........................       1.33%        1.55%        1.43%        1.17%        1.25%
Return on average common equity ..................      19.88%       20.95%       20.22%       18.82%       20.33%
Ratio of average common equity to avg
 assets ..........................................       6.68%        7.42%        7.05%        6.22%        6.17%
Tier 1 risk-based capital -- period end ..........      11.74%       14.16%       11.33%       11.81%       10.85%
Total risk-based capital -- period end ...........      13.75%       17.52%       14.03%       14.95%       14.12%
Leverage ratio -- period end .....................       6.75%        8.70%        6.33%        6.24%        5.44%
Ratio of nonperforming assets to total
 assets -- period end ............................        .17%         .19%         .21%         .38%         .64%
Ratio of nonperforming assets to net loans
and leases and other real estate owned and
 other nonperforming assets at period end.                .33%         .36%         .41%         .79%        1.23%
Ratio of net charge-offs (recoveries) to aver-
 age loans and leases ............................        .19%         .11%         .10%         .19%      (  .23)%
Ratio of allowance for loan losses to net
 loans and leases outstanding at period end              1.65%        2.00%        2.39%        2.80%        2.75%
Ratio of allowance for loan losses to nonper-
 forming loans at period end .....................     638.84%      566.35%      660.17%      471.89%      250.13%
</TABLE>

- ---------
(1)  Noninterest  expenses  for the year  ended  December  31,  1993  included a
     one-time expense of $6,022,000 in the first quarter of 1993, related to the
     early  extinguishment  of debt which was  necessitated  by the  decision in
     March 1993 to notify  holders of floating rate notes  totaling  $37,450,000
     and  industrial  revenue bonds totaling  $4,720,000  that the debt would be
     redeemed  during  the second  quarter of 1993.  The  expense  consisted  of
     marking to market an interest rate exchange  agreement entered into several
     years earlier in  conjunction  with the issuance of the floating rate notes
     and writing off deferred costs  associated with the notes and bonds.  Early
     redemption  of the bonds and notes in the second  quarter  of 1993  allowed
     Zions Bancorporation to avail itself of lower costs funding.

(2)  Cumulative  effect of changes in accounting  principles  for the year ended
     December  31,  1993  resulted  from the  cumulative  effect of  changes  in
     accounting  principles  in the  first  quarter  of 1993,  arising  from the
     adoption  as of January 1,  1993,  of  Statement  of  Financial  Accounting
     Standards  (SFAS)  No.  106,  "Employers'   Accounting  for  Postretirement
     Benefits  Other than  Pensions," and SFAS No. 109,  "Accounting  for Income
     Taxes." The  election of immediate  recognition  of the  cumulative  effect
     (transition   obligation)   of  such  change  in   accounting   method  for
     postretirement benefit other than pensions of SFAS No. 106 decreased pretax
     and after-tax net income by $5,760,000  and  $3,631,000,  respectively.  In
     addition to the $2,129,000 deferred tax benefit resulting from the adoption
     of SFAS No. 106 the  election to apply SFAS No. 109  prospectively  and not
     restate prior years resulted in net deferred tax benefits of $5,290,000 for
     the expected future tax consequences of temporary  differences  between the
     carrying amounts and the tax bases of other assets and liabilities.

(3)  Net interest margin represents net interest income on a  taxable-equivalent
     basis as a percentage of average earning assets.


                                       43
<PAGE>



STOCK PRICES AND DIVIDENDS ON ZIONS COMMON STOCK

    Zions Common Stock is traded on the Nasdaq NMS under the symbol  "ZION." The
following  table  provides  the high and low dally sales prices for Zions Common
Stock for the periods  indicated,  in each case as reported by the Nasdaq  Stock
Market and the cash  dividends per share declared on Zions Common Stock for such
periods.

<TABLE>
<CAPTION>
                                                                                               CASH
                                                                                               DIVIDENDS
                                                                   HIGH            LOW         DECLARED
                                                                   ----            ---         --------
<S>                                                               <C>             <C>          <C>   
1996
First Quarter ..................................................  $19.81          $16.69       $.1025
Second Quarter .................................................   19.75           17.00        .1025
Third Quarter ..................................................   22.44          l 8.00        .11
Fourth Quarter .................................................   26.00           21.94        .11
                                                                                               ------ 
                                                                                               $.425
                                                                                               =====
1997
First Quarter .................................................. $ 33.25         $ 25.69       $ .11
Second Quarter .................................................   37.63           28.38         .12
Third Quarter ..................................................   41.13           34.69         .12
Fourth Quarter .................................................   46.00           37.63         .12
                                                                                               -----
                                                                                               $ .47
                                                                                               =====
1998
First Quarter .................................................. $ 55.69         $ 39.56       $ .12
Second Quarter .................................................   53.l3           48.06       $ .14
Third Quarter (through September _, 1998) ......................      XX              XX          XX
</TABLE>

    On May 14, 1998, the last trading date prior to the public  announcement  of
the  Reorganization,  the closing sale price for the Zions Common Stock was $ On
September _, 1998, the last trading date before this Proxy  Statement/Prospectus
was sent to the printers,  the closing sale price for the Zions Common Stock was
$ On ,1998, there were approximately  [75,046,917]  shares of Zions Common Stock
outstanding, held by approximately [5,693] shareholders of record.

    While  Zions  is not  obligated  to pay  cash  dividends.  Zions'  Board  of
Directors  presently  intends to continue  the policy of paying  quarterly  cash
dividends.  Future  dividends  will  depend,  in  part,  upon the  earnings  and
financial condition of Zions.

                                       44
<PAGE>



                INFORMATION CONCERNING THE COMPANY AND THE BANK

GENERAL

    The Bank was  organized in 1982 and  received  its federal  Charter from the
Comptroller  of the Currency on August 27, 1982.  The only office was located in
Woodland  Park,  Colorado.  Since its  inception,  the Bank has offered  general
commercial  banking  services  to its  customers  and  caters  to  smaller-sized
businesses due to the size and nature of the community. The Bank engages in most
banking activities, including accepting savings and checking deposits and making
commercial,  installment,  and  construction  loans. It also offers a variety of
other banking  products  including  safe deposit boxes,  debit cards,  cashier's
checks, 24-hour ATM access, 24- hour telephone account access, US Savings Bonds,
ATM  credit  transfers,   wire  transfers,   money  orders,  and  mortgage  loan
origination.  The Bank does not offer trust, investment management and insurance
services.

    The original  majority  shareholder sold his interest in the Bank in January
1989, to the other existing  shareholders and one new shareholder.  In June 1990
the  shareholders   formed  a  one-bank  holding  company,   the  Company.   The
shareholders received pro-rata shares of the Company, and the Company then owned
100% of the Bank. In a virtually  simultaneous  transaction,  the Bank purchased
the  assets  of Rocky  Mountain  Savings  and Loan  from  the  Resolution  Trust
Corporation.  Additionally,  a leasing company,  Mountain  National Bank Service
Company,  was  organized at the same time.  Mountain  National Bank and Mountain
National  Bank  Service  Company  were then  wholly  owned  subsidiaries  of the
Company.  The Service Company is presently  being  dissolved  because of lack of
activity.  The  outstanding  capital  stock  of  the  Company  is  owned  by  16
shareholders of record.

    The  Company  and the  Bank  changed  from  "C"  corporation  status  to "S"
corporation status effective January 1, 1997. Since that time, the Bank has paid
a dividend to the Company of 50% of the Bank's earnings for  distribution to the
shareholders  of the  Company  for the  purpose  of  paying  taxes  due from the
shareholders.  As a registered bank holding  company,  the Company is subject to
regulation and examination by the Federal Reserve Board.

    The Company's  principal  asset is the Bank,  owning 100% off the Bank.  Its
primary  source of income is periodic  dividends  from the Bank to pay  whatever
expenses the Company  incurs.  The only other dividends to the Company have been
from the Bank for distribution to the shareholders for their tax liability.

THE BANK

    The Bank has  operated  at its  current  location  of 361 West  Highway  24,
Woodland Park, Colorado,  since its inception in 1982. It is the largest bank in
Teller  County.  At June 30, 1998,  the Bank had total assets of $90.8  million,
total deposits of  $81.8 million, total loans of $54.3 million, and stockholders
equity of $8.4 million. Over the period from 1992 to

                                       45


<PAGE>



June 30, 1998, the Bank experienced  continued growth.  Assets and deposits grew
at a 14.94%  and  14.09%  compound  annual  rate,  respectively.  Over that same
period,  the compound  annual loan growth was 21.24%.  The Bank has  continually
improved its profitability over the last several years, achieving a 2.99% return
on average assets for 1997 and a 3.52%  annualized  return on average assets for
the period  ending  March 31,  1998.  1997 and 1998 are reported as gross income
because of the Bank's "S" corporation  status.  The Bank is a member of the FDIC
and the Federal Reserve System and is subject to examination by the Comptroller.

    Total  assets of the Bank have grown from $77.6  million at June 30, 1997 to
$90.8  million at June 30, 1998.  For the six months  ended June 30,  1998,  the
Bank's  income was $1.4 million  compared to $1.1 million for the same period in
1997  (after  a charge  for the  Subchapter  "S"  election).  On June 30,  1997,
deposits were $68.9  million and net loans were $53.9 million  compared to $81.8
million and $54.3 million,  respectively,  at June 30, 1998. Net interest income
for the six months  ended  June 30,  1998,  was $2.3  million  compared  to $2.1
million for the same period in 1997.

    Market Areas  Served.  The Bank has two  facilities.  The main office of the
Bank has always  been in  Woodland  Park and the newest  facility  is in Cripple
Creek,  which  commenced  operations  in January  1998.  The main  location  and
detached  drive-up  are located in the central part of Woodland  Park.  Woodland
Park continues to grow due to its proximity to Colorado Springs.  As primarily a
bedroom  community to Colorado  Springs,  its growth has been tied to the strong
growth experienced in Colorado Springs.  Cripple Creek's economy has been helped
greatly since 1991 with the advent of both mining and limited stakes gaming.

Teller County is among the fastest growing counties in Colorado.

     Loans.  The Bank follows a uniform credit policy for its loans,  which sets
forth underwriting and loan  administration  criteria,  including levels of loan
commitments,   loan  types,   credit  criteria,   concentration   limits,   loan
administration,  loan review and grading and related matters.  The Bank monitors
asset quality  utilizing an internal and external loan review program.  Interest
rates charged on loans vary with the degree of risk, maturity,  underwriting and
servicing  costs,  loan  amount  and  extent  of  other  banking   relationships
maintained  with customers,  and are further  subject to competitive  pressures,
money  market  rates,   availability   of  funds  and  government   regulations.
Approximately 44% (approximately  $24.3 million) of the Bank's loan portfolio at
June 30, 1998,  had interest  rates that float with the prime rate or some other
reference rate.

    In the ordinary  course of business,  the Bank enters into various  types of
transactions  that include  commitments  to extend credit and letters of credit.
The Bank uses the same credit  policies to these  commitments  as it uses in all
its lending  activities and has included  these  commitments in its lending risk
evaluations. The Bank's exposure to credit loss under

                                       46


<PAGE>



commitments to extend credit is  represented  by the amount of the  commitments.
Under  applicable  federal and state law,  permissible  loans by the Bank to one
borrower were limited to an aggregate of approximately  $1.3 million at June 30,
1998.

    Loan Portfolio. The following table describes the classification of loans of
the Bank by major categories at the dates indicated.

<TABLE>
<CAPTION>
                                               June              December                 December
                                                 30,                31,                       31,
                                                1998               1997                      1996
                                                ----             --------                 ---------

                                                            (In thousands)
<S>                                            <C>                  <C>                    <C>     
Commercial and industrial.                     $15,058              $10,281                $10,184 
                                                                                                   
Real Estate:                                   
     Construction ........                      10,659               10,452                 10,396  
                                                                                                    
     Commercial .........                       17,433               19,055                 15,645  
                                                                                                    
Installment ..............                      11,822               11.585                  9.210  
                                                ------               ------                  -----  
                                                                        
      Total loans ..........                   $54,972              $51.373                $45.435  
                                               -------              -------                -------  
 Less Allowance for losses..                      (693)                (670)                  (507)
                                               -------              -------                -------

      Net loans ...........                    $54,279              $50.703                $44,928  
                                               =======              =======                =======  
</TABLE>
                                               


    The  Bank's  focus  has been on  construction  loans  and  loans to small to
medium-size  businesses;   consequently,  these  categories  represent  a  large
percentage of the Bank's loan portfolio.  The Bank primarily accepts real estate
as collateral for these loans.

    The real estate loan category  consists  principally of improved real estate
loans.  The Bank  makes few land  loans;  and all the first  mortgage  loans for
single  family  homes  that  are  originated  by the Bank  are  brokered  in the
secondary market with none of the balances being carried directly by the Bank.

    Installment/Consumer  loans represent  21.5% of total loans.  These loans to
individuals  for  non-business  purposes  (household,  family and other personal
purposes)  include new and used car loans, home equity loans, and credit reserve
lines. The Bank does not have any student loans in the loan portfolio.  Although
the Bank's loan portfolio is focused on real estate exposure,  the Bank does not
believe that this poses an unacceptable  risk due to conservative  loan to value
underwriting guidelines coupled with the fact that property values in the Bank's
area are currently increasing. As of June 30, 1998, 69% of the

                                       47


<PAGE>



total portfolio was secured by real estate  (approximately  $38.3 million).  The
Bank has a mixture of fixed rate and floating  rate loans.  As of June 30, 1998,
approximately 44% of the portfolio or approximately  $24.3 million were variable
rate loans with the general spread being 1% to 2% above prime.

    The following table presents at June 30, 1998, and December 31, 1997,  loans
by maturity.  Actual maturities may differ from the contractual maturities shown
below as a result of renewals and prepayments.

(In Thousands)


<TABLE>
<CAPTION>
<S>                                                    <C>                        <C> 
  Maturity                                              June 30, 1998          December 31, 1997
  --------                                              -------------          -----------------
  
  Less than 1 year                                        $24,912                    $22,195  
  One year to 5 years                                      15,822                     14,484  
  Over 5 years                                             14,238                     14,694  
                                                          -------                    -------  
                           Total                          $54,972                    $51,373  
                                                          =======                    =======  


</TABLE>
                                                                              
    The Bank makes  primarily  commercial,  real  estate and  consumer  loans to
businesses  and  individuals  in  Colorado.   Although  the  loan  portfolio  is
diversified,  approximately $38.3 million at June 30, 1998, and $39.7 million at
December 31, 1997, represented loans collateralized by real estate.

    Non-Performing  Assets.  The Bank  knows of no  material  loans that are now
current  where  there are serious  doubts as to the  ability of the  borrower to
comply with present loan repayment  terms.  At June 30, 1998, the Bank had total
criticized assets (i.e. non-performing, doubtful, substandard, or loss loans) of
$760,000,  representing  1.4% of total loans and 9.1% of capital.  The following
table sets forth information  concerning the Bank's non-performing assets at the
dates indicated:

                                       48


<PAGE>


<TABLE>
<CAPTION>
                                                                           June 30,           December 31,
                                                                            1998           1997          1996
                                                                           --------        ----          ----
                                                                                   (Dollars in thousands)
<S>                                                                       <C>             <C>           <C>  
    Non performing loans:

    Loans 90 days or more delinquent and still accruing .................  $    --         $  --         $  --
    Nonaccrual loans ....................................................        4             9            --
    Troubled debt restructurings ........................................       --            --            --
                                                                           -------         -----         -----
                 Total nonperforming loans ..............................        4             9            --

    Other real estate owned .............................................      573            --            79

    Other assets acquired by foreclosure ................................       --            --            --
                                                                           -------         -----         -----
                 Total nonperforming assets .............................  $   577         $   9         $  79
                                                                           =======         =====         =====
    Allowance for loan losses ...........................................  $   693         $ 670         $ 507

    Ratio of total nonperforming assets to total assets .................      .64%          .01%          .11%

    Ratio of total nonperforming loans to total loans ...................      .01%          .02%           --%

    Ratio of allowance for loan losses to total loans ...................     1.26%         1.30%         1.12%

    Total delinquency ratio .............................................      .05%          .32%          .20%
</TABLE>

    Non-performing loans.  Non-performing loans consist of loans 90 days or more
delinquent  and still  accruing  interest,  non-accrual  loans and troubled debt
restructurings.  There were no material  non-performing loans at either June 30,
1998 or December 31, 1997.

    Non-accrual  loans are  loans on which  the  accrual  of  interest  has been
discontinued. When, in the opinion of Bank management, a reasonable doubt exists
as to the full,  timely  collection of interest or principal,  regardless of the
delinquency status of a loan, the accrual of interest income is discontinued and
all interest previously accrued, but not collected,  is reversed against current
period  interest  income.  While the loan is on a non-accrual  status,  interest
income  is  recognized  only  upon  receipt  and only  if,  in the  judgment  of
management,  future  collection of principal is probable.  Loans 90 days or more
delinquent are changed to  non-accrual  status unless the loan is in the process
of collection and management  determines  that full  collection of principal and
accrued interest is probable. Interest accruals are resumed on non-accrual loans
only when, in the judgment of the Bank management, the loans are estimated to be
fully collectible as to both principal and interest.

                                       49


<PAGE>




    Troubled  debt  restructurings  are loans  that have been  re-negotiated  to
provide a reduction  or deferral of interest or principal  balance  because of a
deterioration in the financial position of the borrower.

    Additional  interest  income  on  non-accrual  loans  that  would  have been
recognized in 1997 had the loans been current in accordance  with their original
terms was not material.

    Other Real Estate Owned.  Other real estate owned ("OREO") includes property
acquired  in  foreclosure   proceedings  or  under  agreements  with  delinquent
borrowers.  The Bank had no OREO at December 31,  1997,  but as of June 30, 1998
there  was  $572,522  in OREO.  This  consists  of two  borrowers/two  pieces of
property.  Both  are well  secured  and  comfortably  margined  and  there is no
deficiency  anticipated  on the  sale of  either  piece  of  property.  One loan
($238,309) is a participation purchased and was paid by the middle of July 1998.
The other is a direct  loan that the Bank is  waiting  to market but it has been
delayed by the borrower's  bankruptcy.  The balance of that  remaining  piece of
OREO is $334,213.

    Analysis of Allowance  for Loan  Losses.  The  allowance  for loan losses is
established  through  charges to  earnings  in the form of  provisions  for loan
losses.  Charge  offs or  recoveries  are  charged or  credited  directly to the
allowance.  In general,  the amount charged to earnings each year by the Bank is
based on the Bank management's judgment, which takes into consideration a number
of factors, including: (a) the Bank's loss experience in relation to outstanding
loans  and the  existing  level of the  allowance;  (b) a  continuing  review of
problem loans,  related uncollected  interest and overall portfolio quality; (c)
regular  examinations and appraisals of loan portfolios  conducted by the Bank's
external auditors and federal supervisory authorities;  and (d) current economic
conditions.  A full  analysis  of the  Allowance  for Loan  Losses is  performed
quarterly.

    The following table provides the historical  relationship between the Bank's
loan  charge  offs and  recoveries  and  allowance  for loan losses at the dates
indicated:

                                       50


<PAGE>
<TABLE>
<CAPTION>

                                                          Six Months Ended                                  
                                                             June 30,               Year ended December 31,    
                                                            --------               -----------------------    
                                                              1998                  1997              1996    
                                                              ----                  ----              ----    
<S>                                                        <C>                        <C>             <C>       
Balance of allowance for loan losses at
     beginning of period                                   $670,028                   $507,465        $351,023  
                                                                                                               
CHARGE OFFS:                                           
Commercial and industrial                                        --                        --              --
Real Estate:                                                     --                        --              --
 Construction                                                    --                     (3,202)        (17,836)
 Commercial                                                    (360)                   (16,659)        (20,205)
Installment                                                                                                    
    Total charge-offs                                       $  (360)                  $(19,861)       $(38,041)
                                                                                                               
RECOVERIES:                                                     
Commercial and industrial                                        --                        --              --   
Real Estate:                                                    
 Construction                                                    --                        --              --  
 Commercial                                                      --                        --              583 
Installment                                                   2,884                      2,424             172 
                                                                                                               
    Total recoveries                                       $  2,884                     $2,424            $755 
                                                                                                               
Net (charge-offs) recoveries                                 $2,524                  $ (17,437)       $(37,286)
Provision for loan losses                                    20,000                    180,000         193,729 
                                                                                                               
Balance of allowance for loan losses                       $692,552                   $670,028        $507,465 
     at end of period                                      --------                   --------        -------- 
                                                                                                               
Ratio of net charge-offs (recoveries)                  
to average loans                                               (.00%)                      .03%            .09% 
Average loans outstanding during period                 $54,825,000                $52,531,055     $41,439,603  
</TABLE>


INVESTMENT SECURITIES

    The  Bank  maintains  a  portfolio  of  investment   securities  to  provide
additional  diversification  and  earnings on funds not being  utilized for loan
activity or other  purposes.  The Bank has formalized an investment  policy that
the Bank may  invest  in direct  obligations  of the U.S.  Treasury;  securities
backed  by  Federal  agencies;  state,  county  and  municipal  securities  that
represent general  obligations of the issuer;  revenue bonds rated Baa or higher
by Moody's or Standard & Poor's;  money market  instruments of federally insured
institutions; and corporate securities rated Baa or higher. To reduce investment
risk and ensure that  investments  do not exceed legal  investment  limits,  the
Bank's  Asset  Liability  Committee  meets at least  quarterly  to consider  the
investment  securities  portfolio and its quality,  maturity,  marketability and
risk  diversification.  The Asset  Liability  Committee  reports to the Board of
Directors of the Bank on a quarterly basis.

                                       51


<PAGE>

     The  following  table  provides  the amortized cost and market value of the
Bank's investment securities by class of security at the date indicated.





<TABLE>
<CAPTION>
                                      JUNE 30, 1998            DECEMBER 31, 1997          DECEMBER 31, 1996
                                 ------------------------   ------------------------   -----------------------
                                  AMORTIZED      MARKET      AMORTIZED      MARKET      AMORTIZED      MARKET
                                     COST         VALUE         COST         VALUE         COST        VALUE
                                 -----------   ----------   -----------   ----------   -----------   ---------
                                                            (DOLLARS IN THOUSANDS)
<S>                              <C>           <C>          <C>           <C>          <C>           <C>
Securities available for sale:
U.S. Treasury ................     $ 5,252      $ 5,333       $ 5,751      $ 5,841       $ 7,060      $ 7,123
U.S. Agency ..................       8,667        8,742        12,033       12,084         5,837        5,807
Mortgage-backed ..............          --           --            --           --            --           --
Federal Home Loan Bank
 and Federal Reserve Bank
 Stock .......................         105          105           105          105            75          105
                                   -------      -------       -------      -------       -------      -------
Total securities available for
 sale ........................     $14,024      $14,180       $17,889      $18,030       $12,972      $13,035
                                   =======      =======       =======      =======       =======      =======
Securities held to maturity:
U.S. Treasury ................     $    --      $    --       $    --      $    --       $    --      $    --
U.S. Agency ..................          --           --            --           --            --           --
Mortgage-backed ..............         940          933         1,077        1,076         1,328        1,361
States & political
 subdivisions ................       1,966        1,984         1,756        1,780         1,807        1,816
                                   -------      -------       -------      -------       -------      -------
Total securities held to
 maturity ....................     $ 2,906      $ 2,917       $ 2,833      $ 2,856       $ 3,135      $ 3,177
                                   =======      =======       =======      =======       =======      =======
</TABLE>



                                       52

<PAGE>



     The  following table describes the carrying values, maturities and weighted
average yields of the Bank's securities portfolio at June 30, 1998.


<TABLE>
<CAPTION>
                                                                                      DUE AFTER FIVE
                                                DUE IN ONE      DUE AFTER ONE YEAR         YEARS
                                               YEAR OR LESS     THROUGH FIVE YEARS   THROUGH TEN YEARS
                                            ------------------- ------------------- -------------------
                                             AMOUNT     YIELD    AMOUNT     YIELD    AMOUNT     YIELD
                                            -------- ---------- -------- ---------- -------- ----------
                                                              (DOLLARS IN THOUSANDS)
<S>                                         <C>      <C>        <C>      <C>        <C>      <C>
Securities available for
 sale:
U.S. Treasury .............................  $  500      5.34%   $4,833      6.59%   $   --        --
U.S. Government agencies ..................   1,504      5.86%    1,292      6.54%    5,946      6.94%
Mortgage backed securities ................      --        --        --        --        --        --
State and political
 subdivisions .............................      --        --        --        --        --        --
Federal Home Loan Bank
 and Federal Reserve Bank
 Stock ....................................      --        --        --        --        --        --
                                             ------              ------              ------
 TOTAL ....................................  $2,004      5.73%   $6,125      6.58%   $5,946      6.94%
                                             ======              ======              ======
Securities held to maturity: ..............  $   --        --    $   --        --    $   --        --
U.S. Treasury .............................      --        --        --        --        --        --
U.S. Government agencies ..................      --        --        --        --        --        --
Mortgage backed securities ................     292      6.15%      648      6.11%       --        --
State and political subdivisions ..........     230      4.32%    1,736      4.36%       --        --
                                             ------              ------              ------
 TOTAL ....................................  $  522      5.35%   $2,384      4.84%   $   --        --
                                             ======              ======              ======

<CAPTION>

                                                 DUE AFTER
                                                 TEN YEARS              TOTAL
                                            ------------------- ---------------------
                                             AMOUNT     YIELD     AMOUNT      YIELD
                                            -------- ---------- ---------- ----------
                                                     (DOLLARS IN THOUSANDS)
<S>                                         <C>      <C>        <C>        <C>
Securities available for
 sale:
U.S. Treasury .............................   $ --         --    $ 5,333       6.47%
U.S. Government agencies ..................     --         --      8,742       6.70%
Mortgage backed securities ................     --         --         --         --
State and political
 subdivisions .............................     --         --         --         --
Federal Home Loan Bank
 and Federal Reserve Bank
 Stock ....................................    105       3.75%       105       3.75%
                                              ----               -------
 TOTAL ....................................   $105       3.75%   $14,180       6.56%
                                              ====               =======
Securities held to maturity: ..............   $ --         --    $    --         --
U.S. Treasury .............................     --         --         --         --
U.S. Government agencies ..................     --         --         --         --
Mortgage backed securities ................     --         --        940       6.12%
State and political subdivisions ..........     --         --      1,966       4.35%
                                              ----               -------
 TOTAL ....................................   $ --         --    $ 2,906       4.92%
                                              ====               =======
</TABLE>


                                       53

<PAGE>



     The  following table describes the carrying values, maturities and weighted
average yields of the Bank's securities portfolio at June 30, 1998.


<TABLE>
<CAPTION>
                                                                                      DUE AFTER FIVE
                                                DUE IN ONE      DUE AFTER ONE YEAR         YEARS
                                               YEAR OR LESS     THROUGH FIVE YEARS   THROUGH TEN YEARS
                                            ------------------- ------------------- -------------------
                                             AMOUNT     YIELD    AMOUNT     YIELD    AMOUNT     YIELD
                                            -------- ---------- -------- ---------- -------- ----------
                                                              (DOLLARS IN THOUSANDS)
<S>                                         <C>      <C>        <C>      <C>        <C>      <C>
Securities available for
 sale:
U.S. Treasury .............................  $1,992      5.19%   $3,849      7.03%   $   --        --
U.S. Government agencies ..................      --        --     5,523      6.40%    6,561      6.86%
Mortgage backed securities ................      --        --        --        --        --        --
State and political
 subdivisions .............................      --        --        --        --        --        --
Federal Home Loan Bank
 and Federal Reserve Bank
 Stock ....................................      --        --        --        --        --        --
                                             ------              ------              ------
 TOTAL ....................................  $1,992      5.19%   $9,372      6.66%   $6,561      6.86%
                                             ======              ======              ======
Securities held to maturity: ..............  $   --        --    $   --        --    $   --        --
U.S. Treasury .............................      --        --        --        --        --        --
U.S. Government agencies ..................      --        --        --        --        --        --
Mortgage backed securities ................     343      6.02%      734      6.07%       --        --
State and political subdivisions ..........     230      4.31%    1,526      4.39%       --        --
                                             ------              ------              ------
 TOTAL ....................................  $  573      5.33%   $2,260      4.94%   $   --        --
                                             ======              ======              ======

<CAPTION>

                                                 DUE AFTER
                                                 TEN YEARS              TOTAL
                                            ------------------- ---------------------
                                             AMOUNT     YIELD     AMOUNT      YIELD
                                            -------- ---------- ---------- ----------
                                                     (DOLLARS IN THOUSANDS)
<S>                                         <C>      <C>        <C>        <C>
Securities available for
 sale:
U.S. Treasury .............................   $ --         --    $ 5,841       6.38%
U.S. Government agencies ..................     --         --     12,084       6.65%
Mortgage backed securities ................     --         --         --         --
State and political
 subdivisions .............................     --         --         --         --
Federal Home Loan Bank
 and Federal Reserve Bank
 Stock ....................................    105       3.75%       105       3.75%
                                              ----               -------
 TOTAL ....................................   $105       3.75%   $18,030       6.54%
                                              ====               =======
Securities held to maturity: ..............   $ --         --    $    --         --
U.S. Treasury .............................     --         --         --         --
U.S. Government agencies ..................     --         --         --         --
Mortgage backed securities ................     --         --      1,077       6.05%
State and political subdivisions ..........     --         --      1,756       4.38%
                                              ----               -------
 TOTAL ....................................   $ --         --    $ 2,833       5.01%
                                              ====               =======
</TABLE>


                                       54

<PAGE>



DEPOSITS

     The  following  table  presents  the  average balances of the Bank for each
major  category  of  deposits  and  the  weighted average interest rate paid for
interest-bearing deposits for the periods indicated:


<TABLE>
<CAPTION>
                                                                                    YEARS ENDED DECEMBER 31,
                                                                            ----------------------------------------
                                     JUNE 30, 1998        JUNE 30, 1997             1997                1996
                                  -------------------- -------------------- -------------------- -------------------
                                             WEIGHTED             WEIGHTED             WEIGHTED             WEIGHTED
                                              AVERAGE              AVERAGE              AVERAGE             AVERAGE
                                   AVERAGE   INTEREST   AVERAGE   INTEREST   AVERAGE   INTEREST   AVERAGE   INTEREST
                                   BALANCE     RATE     BALANCE     RATE     BALANCE     RATE     BALANCE     RATE
                                  --------- ---------- --------- ---------- --------- ---------- --------- ---------
                                                                (DOLLARS IN THOUSANDS)
<S>                               <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
NOW/MMDA ........................  $26,739  2.79%       $23,083  2.57%       $24,153  2.33%       $20,546     2.16%
Savings .........................   11,556  2.92%        10,254  2.89%        11,132  2.94%         9,740     2.93%
Time Cd's less than 100k ........   15,155  5.53%        13,205  5.68%        14,661  5.67%        12,667     5.53%
Time Cd's more than 100k ........   11,228  6.18%         9,498  5.97%        10,204  5.92%        10,741     5.70%
Total Interest Bearing Deposits .   64,678  4.04%        56,040  3.94%        60,150  4.03%        53,694     3.95%
Non-interest bearing DDA ........   14,923               13,557               14,339               12,207
Total Deposits ..................  $79,601              $69,597              $74,489              $65,901
                                   =======              =======              =======              =======
</TABLE>



                                       55

<PAGE>



    The  following  table  provides the amount and maturity of  certificates  of
deposit with balances of more than $100,000 as of June 30, 1998 and December 31,
1997.


<TABLE>
<CAPTION>
                                                  June 30, 1998          December 31, 1997 
                                                  -------------          ----------------- 
Remaining maturity                                          (In thousands)
- ------------------
<S>                                            <C>                                 <C>    
Under 3 months                                 $ 4,582                             $ 4,995
3 to 6 months                                    3,372                               2,142
6 to 12 months                                   2,663                               2,606
Over 12 months                                     666                                 465
                                                   ---                                 ---

Total                                          $11,283                             $10,208
                                               =======                             =======
</TABLE>

    Return on Bank Assets and Equity. The following table describes for the Bank
as of December 31, 1997, 1996 and 1995 returns on assets,  returns on equity and
certain related ratios:

<TABLE>
<CAPTION>
                                                          Years ended December 31,

                                               1997(1)              1996                1995
                                               -------              ----                ----

<S>                                             <C>                 <C>                  <C>    
Return on assets*                               2.96%               1.97%                2.02%  
Return on equity**                             33.30%              22.67%               24.56%  
Equity to assets ratio***                       8.88%               8.68%                8.21%  
Dividend payout ratio****                      45.85%                 --%                  --%  
</TABLE>
                                            

*    Net income divided by average total assets.
**   Net income divided by average stockholders' equity.
***  Average total equity divided by average total assets.
**** Dividends paid per share divided by net income per share.
(1)  Change in tax status to S-Corporation status.


COMPETITION

    There  is one  other  bank  in  Woodland  Park,  Park  State  Bank,  that is
approximately  $48  million in size;  one branch of a  Colorado  Springs  credit
union, Pikes Peak Credit Union, approximately $25 million counting all branches;
and one branch of  Community  Bank of  Colorado  in the town of  Cripple  Creek,
approximately  $25 million in size.  Community  Bank of Colorado  has  purchased
ground in Woodland  Park and intends to open a branch there.  Additionally,  the
Safeway  store being  constructed  at the entrance to Woodland Park will have an
"in-store"  branch of Wells Fargo Bank.  Colorado  Springs,  14 miles away,  has
major  regional  banks like Norwest,  Bank One,  etc. as well as large  Colorado
banks such as First Bank Holding of Colorado.  Additionally,  there are numerous
small  independent  banks in Colorado  Springs as well as savings  institutions,
credit unions, and nondepository lending

                                       56


<PAGE>



companies.  The short  distance to Colorado  Springs and the frequency of travel
there make  these  institutions  convenient  alternatives.  Finally,  many other
institutions make their products and services available through  non-traditional
delivery channels.

    The primary factors  affecting  competition for deposits are interest rates,
cost of services,  the quality and range of financial  products  offered and the
convenience of locations and office hours.  The primary factors in competing for
loans are interest  rates,  loan  origination  fees and the quality and range of
lending products  offered.  Other factors which affect  competition  include the
general  availability  and  reliability  of  lendable  funds,  general and local
economic  conditions  and the quality of service and loan  approval  turn-around
provided to the customers.

    The Bank  believes  that it has been  successful  in  developing  a niche of
catering to small businesses and consumers by providing a comprehensive  banking
relationship.  It further  believes that this success is attributable in part to
personal service and by striving to meet all of the customer's essential banking
needs.

THE BANK'S FACILITIES

    The Bank owns the facility in Woodland  Park and the ground for the facility
to be built in Cripple  Creek,  but is leasing  space in Cripple  Creek  until a
building is constructed. The facility in Woodland park is 10,000 square feet and
is located at 361 West  Highway  24.  The leased  space in Cripple  Creek is 500
square feet and is located at 150 East Bennett Avenue.

    The Bank also owns a total of fifteen ATMs,  two of which are located at the
Bank  location in Woodland  Park,  one in City Market in Woodland  Park,  one in
Highlands Market in Divide, Colorado, one at the Cripple Creek facility, and the
rest are in various casinos in Cripple Creek.

    Additionally,  the Bank  operates a mobile  branch in the form of an armored
car, which services casinos and other commercial businesses in Teller County.

LEGAL PROCEEDINGS

    From time to time,  the Bank is  involved in routine  litigation,  including
foreclosure proceedings,  in the ordinary course of its business. Other than one
foreclosure  proceeding,  the Bank is not involved in any  litigation  as of the
date  of  this  Proxy  Statement/Prospectus.  The  Company  is  involved  in  no
litigation as of the date of this Proxy Statement/Prospectus.

EMPLOYEES

    At June 30,  1998,  the Company and Bank had 43 full-time  employees  and 12
part-time employees. None of the employees is covered by a collective bargaining
agreement

                                       57


<PAGE>



Management of the Bank and Company believe that their  relationships  with their
employees are good.

REGULATORY MATTERS

    As a registered bank holding company under the Bank Holding Company Act, the
Company is subject to the regulations and supervision of the Board of Governors.
The Bank Holding Company Act requires the Company to file reports with the Board
of  Governors  of  the  Federal   Reserve  System  and  provide  any  additional
information when requested.

    The Bank is a national banking  association  organized under the laws of the
United  States.  The Bank is a member  of the  Federal  Reserve  System  and its
deposits are insured by the FDIC. The Bank is subject to regulation, supervision
and regular examination by the OCC.

SELECTED FINANCIAL DATA

    The following selected financial data should be read in conjunction with the
Company's  Consolidated  Financial Statements and the related notes and with the
Company's  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations, which are included in this Proxy Statement/Prospectus.

                                       58

<PAGE>



MOUNTAIN FINANCIAL HOLDING COMPANY AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL DATA


<TABLE>
<CAPTION>
                                             AS OF AND FOR THE SIX     AS OF, AND FOR THE YEAR ENDED
                                             MONTHS ENDED JUNE 30,             DECEMBER 31,
                                            ----------------------- -----------------------------------
                                                1998        1997        1997        1996        1995
                                            ----------- ----------- ----------- ----------- -----------
                                                   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>         <C>         <C>         <C>         <C>
EARNINGS SUMMARY
Net interest income .......................   $ 2,326     $ 2,138     $ 4,408     $ 3,710     $ 3,075
Provisions for losses .....................        20          90         180         193          60
Noninterest income ........................       659         519       1,091       1,067       1,014
Noninterest expense .......................     1,548       1,400       2,957       2,507       2,264
Income taxes ..............................        --          24          24         727         613
Net income ................................     1,417       1,143       2,338       1,350       1,152
COMMON STOCK DATA
Net income per common share ...............   $ 28.34     $ 22.86     $ 46.76     $ 27.00     $ 23.04
Dividends per common share ................     20.40       14.00       21.44           0           0
Book value per share outstanding at period
 end ......................................    167.68      141.68      159.42      132.10      105.92
Weighted average common shares outstanding
 during the period ........................    50,000      50,000      50,000      50,000      50,000
AVERAGE BALANCE SHEET DATA
Securities ................................   $18,886     $14,616     $15,301     $16,557     $14,974
Loans and leases, net .....................    54,132      51,412      51,796      40,164      32,503
Total interest-earning assets .............    77,084      70,723      70,284      59,708      49,392
Total assets ..............................    96,050      76,020      79,095      68,587      57,118
Interest-bearing deposits .................    64,678      56,040      60,150      53,694      41,433
Total Deposits ............................    79,601      69,597      74,489      65,901      51,902
Equity ....................................     7,734       6,528       7,021       5,955       4,691
END OF PERIOD BALANCE SHEET
 DATA
Securities ................................   $17,086     $13,896     $20,863     $16,170     $16,943
Loans and leases, net .....................    54,279      53,885      50,703      44,928      35,628
Allowances for loan losses ................       693         591         670         507         351
Total assets ..............................    90,787      77,568      85,336      74,732      62,634
Total deposits ............................    81,792      68,931      76,644      67,499      56,373
Shareholders' equity ......................     8,384       7,084       7,971       6,605       5,296
Nonperforming assets:
Nonaccrual loans and loans past due 90 days
 or more ..................................   $     4     $    40     $     9     $    --     $   198
Other real estate owned ...................       573          79          --          79          --
                                              -------     -------     -------     -------     -------
Total nonperforming assets ................   $   577     $   119     $     9     $    79     $   198
                                              =======     =======     =======     =======     =======
</TABLE>



                                       59

<PAGE>



<TABLE>
<CAPTION>
                                                     AS OF AND FOR THE SIX    AS OF, AND FOR THE YEAR ENDED
                                                     MONTHS ENDED JUNE 30,             DECEMBER 31,
                                                   ------------------------- --------------------------------
                                                       1998         1997        1997       1996       1995
                                                   ------------ ------------ ---------- ---------- ----------
<S>                                                <C>          <C>          <C>        <C>        <C>
SELECTED RATIOS
Net interest margin ..............................     6.50  %      6.26  %      6.36%      6.12%      6.17%
Return on average assets .........................     3.30%*       3.00%*       2.96%      1.97%      2.02%
Return on average equity .........................    33.78%*      35.02%*      33.30%     22.67%     24.56%
Ratio of ending equity to ending assets ..........     8.99  %      8.59  %      8.88%      8.68%      8.21%
Ratio of nonperforming assets to total assets.....      .64  %       .15  %       .01%       .11%       .32%
Ratio of allowances for loan losses to loans and
 leases outstanding at period end ................     1.26  %      1.08  %      1.30%      1.12%       .98%
Ratio of allowances for loans losses to nonper-
 forming loans ...................................    83.26  %     20.14  %      1.34%     15.58%     56.41%
</TABLE>

     ---------
     *annualized.



                                       60

<PAGE>



STOCK PRICES AND DIVIDENDS ON COMPANY COMMON STOCK

    There is no established  trading  market for the Company Common Stock.  Over
the years,  little  trading in the Company  Common Stock has occurred.  Reliable
information  concerning  the prices at which the Company Common Stock has traded
in private, negotiated transactions is not publicly available or generally known
to the Company.  On occasion,  the Company has become aware of the trading price
of its stock in  private  transactions.  Information  concerning  those  trading
prices has been omitted based on the  Company's  belief that such prices are not
necessarily  representative  of a fair market price for the Company Common Stock
during  any  particular  period.  Since  May 14,  1998,  the  date  the  Plan of
Reorganization was executed and publicly announced, there have been no trades in
the Company's Common Stock.

    The  following  table sets forth the per share cash  dividends  declared and
paid by the Company during each of the last three years.


          1995                               $  0
          1996                               $  0
          1997                               $ 21.44*
          1998 (through June 30)             $ 20.40*

          *    Includes   distributions  to  shareholders   upon  conversion  to
               S-Corporation status.


    As of September  __, 1998 there were  approximately  16 holders of record of
the Company Common Stock.

INFORMATION  CONCERNING THE CHAIRMAN AND CHIEF EXECUTIVE  OFFICER OF THE COMPANY
AND THE BANK

    James P. Oaks,  president and chief executive officer of the Company and the
Bank,  will  serve  as an  executive  officer  of  Vectra  Bank  pursuant  to an
employment  agreement to be executed at closing.  See "Plan of Reorganization --
Interests of Certain Persons in the Transaction" for information  concerning the
employment agreement and other matters relating to Mr. Oaks and the transaction.

    Dale L. Duncan, chairman of the Board and a director of both the Company and
the  Bank  and  a  principal   shareholder  of  the  Company,   will  execute  a
non-competition  agreement at closing.  See "Plan of Reorganization -- Interests
of  Certain  Persons  in  the  Transaction"   for  information   concerning  the
non-competition  agreement  and other  matters  relating  to Mr.  Duncan and the
transaction.

CERTAIN TRANSACTIONS OF THE COMPANY

    The Bank has had banking transactions in the ordinary course of its business
with  directors,  officers,  principal  shareholders  and  their  associates  on
substantially the same terms,


                                       61

<PAGE>



including  interest  rates and collateral on loans,  as those  prevailing at the
same time for comparable  transactions with unaffiliated  parties. To the extent
that such transactions  consisted of extensions of credit,  they did not, in the
opinion of  management,  involve more than a normal risk of repayment or present
other unfavorable  features.  As of June 3 0, 1998, the Company's  directors and
executive  officers and their  related  parties were indebted to the Bank in the
aggregate amount of $665,000, none of which loans were delinquent.

STOCKHOLDINGS OF DIRECTORS, OFFICERS AND CERTAIN OTHERS

    The following table describes as of June 30, 1998, the beneficial  ownership
of the  Company's  Common  Stock (i) by each person  known by the Company to own
beneficially more than 5% of the outstanding  shares of such class, (ii) by each
executive  officer of the Company,  (iii) by each  director of the Company,  and
(iv) by all directors and executive  officers of the Company as a group.  Except
as provided in the notes to the table, each person, to the Company's  knowledge,
has sole  voting and  investment  power over the shares  stated as  beneficially
owned.

<TABLE>
<CAPTION>
Name, title and address of Executive Officers,     Number of Shares             Percent of Class
- ----------------------------------------------     ----------------             ----------------
<S>                                                 <C>                         <C>      
Directors and 5% Beneficial Owners
- ----------------------------------
Dale L. Duncan
Chairman of the Board and Director
4430 Monitor Rock Lane
Colorado Springs, CO 80904 ..................        12,916                      25.832%  
                                                                                             
Dana E. Duncan                                             
Director                                                                                     
3515 Masters Drive                                       
Colorado Springs, CO 80907 ..................         2,367(1)                    4.734%     
                                                                                             
Daniel W. Duncan                                           
Director                                                                                     
206 Aspen Drive                                         
                                                                                             
Woodland Park, CO .........................           2,367(C)                    4.734%   

Raymond A. Giersch
Director
3365 South Placita Del Emblema
Green Valley, AZ 85614 ......................         4,857                       9.714%

Peter C. Kuyper
Director
P.O. Box 624
Divide, CO 80814 ...........................          1,311                       2.622%
                                                      
George W. Mead
P.O. Box 8050
Wisconsin Rapids, WI 54495 ..................        14,665                      29.330% 
                                                     
</TABLE>





                                       62


<PAGE>


<TABLE>
<S>                                                    <C>                       <C>
Charles A. Oaks
Executive Vice President
Director
1130 Kings Crown Road
Woodland Park, CO 80863 ....................           2,524                       5.048%

James P. Oaks
Chief Executive Officer, President and Director
1505 N. Tejon Street
Colorado Springs, CO 80907 ..................          2,624                       5.248%

Richard L. Smith
Director
363 High View Court
Woodland Park, CO 80863 ....................             100                       0.200%

Howard Stull
Director
P.O. Box 743
Woodland Park, CO 80866 ....................             100(3)                    0.200%
                                                  
Russell M. Wiley
Director
121 East Pikes Peak Ave., #223A
Colorado Springs, CO 80903 ..................          2,623(4)                    5.246%
                                                       
All directors and executive officers as a group
(10 persons) ................................         31,789                      63.578%
</TABLE>

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

(1)  Includes  2,267 shares held by the Dana E. Duncan trust and 100 shares held
     by Mr. Duncan.

(2)  Includes  2,267  shares held by the Daniel W.  Duncan  trust and 100 shares
     held by Mr. Duncan.

(3)  Consists of 100 shares held jointly by Mr. Stull and his wife in the Howard
     and Joan Stull trust.

(4)  Includes 850 shares held by Mr. Wiley and 1,773 shares held by Mr.  Wiley's
     wife, Kelly Jo Wiley.


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
                       MOUNTAIN FINANCIAL HOLDING COMPANY

    The following analysis of the Company's  financial condition and the results
of operations for the six months ended June 30, 1998 and 1997, and for the years
ended December 31, 1997,  1996, and 1995 should be read in conjunction  with the
unaudited  Consolidated  Financial  Statements of the Company and notes thereto,
and information presented elsewhere herein. Average balance sheet data are based
on average daily balances outstanding for the period.


                                       63

<PAGE>



GENERAL

    The Company's Consolidated Financial Statements show its financial condition
and information on a consolidated  basis. The Bank is the only operating unit of
the Company.

NET INTEREST INCOME

    For most financial institutions,  the primary components of earnings are net
interest income.  Net interest income is the difference between interest income,
principally  from  loan  and  investment  securities  portfolios,  and  interest
expense,  principally  on  customer  deposits  and  borrowings.  Changes  in net
interest income result from changes in volume,  spread and margin. Volume refers
to the average  dollar  level of  interest-earning  assets and  interest-bearing
liabilities.  Spread  refers to the  difference  between  the  average  yield on
interest-earning  assets and the average cost of  interest-bearing  liabilities.
Margin refers to net interest income divided by average  interest-earning assets
and is influenced by the level and relative mix of  interest-earning  assets and
interest-bearing  liabilities.  During the fiscal years ended  December 31, 1997
and 1996,  average interest earning assets were $70.3 million and $59.7 million,
respectively.  During  these same  periods,  net  interest  margin was 6.36% and
6.12%,  respectively.  At June 30, 1998,  average  interest-earning  assets were
$77.1 million and net interest margin was 6.50%. See "Results of Operations."

     The following tables set forth for the periods indicated,  information with
regard to  average  balances  of assets  and  liabilities,  as well as the total
dollar  amounts of interest  income from  interest  earning  assets and interest
expense on interest-bearing liabilities, resultant yields or costs, net interest
income, net interest spread, and net interest margin.

                                       64
<PAGE>


<TABLE>
<CAPTION>
                                                  JUNE 30, 1998                  DECEMBER 31, 1997
                                         -------------------------------- --------------------------------
                                           AVERAGE               AVERAGE    AVERAGE               AVERAGE
                                           BALANCE    INTEREST     RATE     BALANCE    INTEREST     RATE
                                         ----------- ---------- --------- ----------- ---------- ---------
                                                              (DOLLARS IN THOUSANDS)
<S>                                      <C>         <C>        <C>       <C>         <C>        <C>
INTEREST-EARNING ASSETS ................
Securities .............................   $18,886     $  612      7.28%    $15,301     $  951      6.22%
Federal funds sold Sold ................     3,908         81      4.15%      3,045        172      5.65%
Loans ..................................    54,825      2,881     10.51%     52,466      5,570     10.62%
Less allowance for loan losses .........      (693)        --        --        (670)        --        --
Unrealized gain (loss) on securities
 available for sale ....................       158         --        --         142         --        --
                                           -------     ------               -------     ------
Interest earning assets ................    77,084      3,574      9.27%     70,284      6,693      9.52%
Noninterest earning assets .............     8,966         --        --       8,811         --        --
                                           -------     ------               -------     ------
Total Assets ...........................    86,050      3,574      8.31%     79,095      6,693      8.46%
                                           =======                          =======
LIABILITIES
Interest-bearing DDA & MMDA ............    30,605        338      2.21%     29,044        636      2.19%
Savings ................................     8,396        165      3.93%      7,634        300      3.93%
Time Deposits ..........................    25,677        738      5.75%     23,472      1,343      5.72%
                                           -------     ------               -------     ------
Total Interest-bearing deposits ........    64,678       1,24      3.84%     60,150      2,279      3.79%
Federal funds purchases ................       294          7      4.76%        120          6      5.00%
                                           -------     ------               -------     ------
Total interest-bearing liabilities .....    64,972      1,248      3.84%     60,270      2,285      3.79%
Non-interest bearing DDA ...............    11,969         --        --      12,168         --        --
                                           -------     ------               -------     ------
Total Deposits and Interest Bearing
 Liabilities ...........................    76,941      1,248      3.24%     72,438      2,285      3.15%
                                           =======                          =======
Net Interest Income ....................        --     $2,326        --                 $4,408
                                                       ======                           ======
Interest Rate Spread ...................        --         --      4.51%         --         --      5.73%
Net Interest Rate Margin ...............        --         --      6.50%         --         --      6.36%

<CAPTION>

                                                 DECEMBER 31, 1996
                                         ---------------------------------
                                           AVERAGE                AVERAGE
                                           BALANCE    INTEREST     RATE
                                         ----------- ---------- ----------
                                              (DOLLARS IN THOUSANDS)
<S>                                      <C>         <C>        <C>
INTEREST-EARNING ASSETS ................
Securities .............................  $ 16,557     $  955       6.01%
Federal funds sold Sold ................     2,945        213       5.53%
Loans ..................................    40,666      4,457      11.09%
Less allowance for loan losses .........      (502)        --         --
Unrealized gain (loss) on securities
 available for sale ....................        42         --         --
                                          --------     ------
Interest earning assets ................    59,708      5,665       9.49%
Noninterest earning assets .............     8,879         --         --
                                          --------     ------
Total Assets ...........................    68,587      5,665       8.26%
                                          ========
LIABILITIES
Interest-bearing DDA & MMDA ............    26,674        524       1.97%
Savings ................................     7,089        280       3.95%
Time Deposits ..........................    19,931      1,148       5.76%
                                          --------     ------
Total Interest-bearing deposits ........   53,6794      1,952       3.64%
Federal funds purchases ................        55          3       5.45%
                                          --------     ------
Total interest-bearing liabilities .....    53,749      1,955       3.64%
Non-interest bearing DDA ...............      8.297        --         --
                                          ---------    ------
Total Deposits and Interest Bearing
 Liabilities ...........................  $ 62,046      1,955       3.15%
                                          =========
Net Interest Income ....................               $3,710
                                                       ======
Interest Rate Spread ...................        --         --       5.85%
Net Interest Rate Margin ...............        --         --       6.12%
</TABLE>


                                       65

<PAGE>

     The  following table illustrates the changes in the net interest income due
to  changes  in volume and changes in interest rate. Changes attributable to the
combined  effect  of  volume and interest rate have been allocated to the change
due to volume.


<TABLE>
<CAPTION>
                                                SIX MONTHS ENDED
                                                  JUNE 30, 1998                          DECEMBER 31, 1997
                                        COMPARED TO JUNE 30, 1997 PERIOD                  COMPARED TO 1996
                                             ATTRIBUTABLE TO CHANGE                    ATTRIBUTABLE TO CHANGE
                                      -------------------------------------   ----------------------------------------
                                         TOTAL         IN            IN           TOTAL           IN            IN
                                        CHANGE       VOLUME         RATE         CHANGE         VOLUME         RATE
                                      ----------   ----------   -----------   ------------   ------------   ----------
                                                                       (IN THOUSANDS)
<S>                                   <C>          <C>          <C>           <C>            <C>            <C>
INTEREST-EARNING ASSETS
Loans .............................     $ 169        $ 191         $(22)         $1,063         $1,253        $ (190)
Investment Securities .............       157          148            9            (44)          (478)            34
Federal funds sold ................        13           20             (7)           9              5              4
                                        ------       ------        -------       ------         ------        ------
 Total interest income ............       339          359          (20)         1,028          1,180           (152)
INTEREST-BEARING LIABILI-
 TIES
NOW and MMDA ......................       (34)         (76)          42           (112)           (52)           (60)
Savings ...........................       (25)         (23)            (2)         (20)           (21)             1
Time Deposits .....................       (91)         (83)            (8)        (195)          (203)             8
Federal funds purchases ...........          (1)          (1)        --               (3)            (3)          --
                                        --------     --------      ------        --------       --------      ------
 Total interest expense ...........      (151)        (183)          32           (330)          (279)           (51)
                                        -------      -------       ------        -------        -------       ------
Increase (decrease) in net interest
 income ...........................     $ 188        $ 176         $ 12          $ 698          $ 901         $ (203)
                                        =======      =======       ======        =======        =======       ======
</TABLE>

     The  change  in interest income/expense attributable to volume reflects the
change  in  volume  times  the  current  year's  rate  and the change in interst
income/expense  attributable  to  rate  reflects  the  change in rates times the
prior year's volumes.


                                       66

<PAGE>



RESULTS OF OPERATIONS

Results of Operations

Six months ended June 30, 1998 and 1997

    Overview.  Net interest income  increased  $188,000 for the six months ended
June 30, 1998 to $2,326,000  from  $2,138,000  for the six months ended June 30,
1997.  The  provision  for loan losses was $20,000 for the six months ended June
30, 1998 and $90,000 for the period  ended June 30, 1997.  The net  non-interest
income less non-interest expense remained relatively stable between the periods.
Income  taxes were minor due to the  Company's  election  to report its  taxable
income as an S Corporation  effective  January 1, 1997. The annualized return on
average assets and return on average equity were 3.30% and 33.78%, respectively,
for  the  six  months  ended  June  30,  1998  compared  to  3.00%  and  35.02%,
respectively, for the six months ended June 30, 1997.

    Interest and Fee Income.  Interest income  increased  $339,000 to $3,574,000
for the six months ended June 30, 1998 from  $3,235,000 for the six months ended
June 30, 1997.  Interest income on loans increased  $169,000 and interest income
on securities increased $157,000 for the six months ended June 30, 1998 compared
to the same  period for 1997.  The  interest  income on  federal  funds sold and
interest bearing deposits in banks remained relatively stable during the periods
ended June 30, 1998 and 1997.  The increase in interest  income on loans was the
result of the Bank's marketing efforts. The growth in investment  securities was
a result  of the  overall  growth of the  Bank.  The  rates  earned on loans and
investments have remained relatively stable.

    Interest Expense.  Interest expense increased $151.000 to $1,248,000 for the
six months ended June 30, 1998 from $1,097,000 for the six months ended June 30,
1997. The $150,000  increase in interest  expense on  interest-bearing  deposits
between  the  six  months  periods  was  caused  by  a  $6,582,000  increase  in
interest-bearing   deposits.  The  average  interest  rate  on  interest-bearing
deposits remained approximately the same.

    Net Interest Income.  Net interest income  increased  $188,000 to $2,326,000
for the six months  ended June 30, 1998 from  $2,138,000  for the same period in
1997.  During  the six months  ended June 30,  1998  average  loans  outstanding
increased  $2,720,000,  average  securities  increased  $4,270,000 while the net
interest margin increased from 6.26% to 6.50% for the period ended June 30, 1998
when compared to the same period of 1997.

    Non-Interest Income.  Non-interest income increased $140,000 to $659,000 for
the six months ended June 30, 1998 from  $519,000 for the same period of 1997. A
total of $124,000 of the increase is from brokerage fees on the sale of mortgage
loans.

                                       67


<PAGE>



    Non-Interest Expense.  Non-interest expense increased $148,000 to $1,548,000
for the six months  ended June 30, 1998 from  $1,400,000  for the same period in
1997. The increase includes an increase in salaries, wages and employee benefits
of $211,000 and an $81,000  decrease in other  expenses for the six months ended
June 30, 1998.

    Provision for Loan Losses.  The Bank's provision for loan losses was $20,000
for the six months  ended June 30, 1998 versus  $90,000 for the six months ended
June 30, 1997.

    Income Taxes.  The Company  elected on January 1, 1997 to report its taxable
income under the  provisions of the  Subchapter S of the Internal  Revenue Code.
There was no tax on income for the six month  period  ended June 30,  1998.  The
$24,000  of tax that is  reflected  for the six months  ended June 30,  1997 was
built-in  gains tax required to be paid by the Company in  conjunction  with the
Subchapter S election.

Years Ended December 31, 1997 and 1996

    Overview.   Net  income  increased  $988,000  in  1997  to  $2,338,000  from
$1,350,000 in 1996.  This increase was primarily due to a decrease in income tax
expense of $703,000 caused by the Company's  election on January 1, 1997 to have
its income  taxed under the  provision of  Subchapter S of the Internal  Revenue
Code.  Non-interest  expenses  increased by $450,000 for the year over the prior
year.  Return on average  assets and  return on  average  equity  were 2.99% and
33.30%, respectively,  for 1997 compared to 1.97% and 22.67%, respectively,  for
1996.

    Interest and Fee Income.  Interest and fee income  increased  $1,028,000  to
$6,693,000  for 1997  from  $5,665,000  for 1996.  Interest  income  from  loans
increased  $1,113,000.  Interest income on securities decreased by $44,000 while
interest  income on federal  funds sold  decreased  by $40,000.  The increase in
interest  income on loans was  primarily  due to an increase of  $11,532,000  in
average net loans from 1996 to 1997.

    Interest Expense. Interest expense increased $330,000 to $2,285,000 for 1997
from  $1,955,000 in 1996. The increase in interest  expense was primarily due to
greater deposit volume in 1997 as the rates paid on  interest-bearing  deposit s
were relatively unchanged.

    Net Interest Income.  Net interest income  increased  $698,000 to $4,408,000
for 1997 from  $3,710,000  for 1996.  During  1997,  average  loans  outstanding
increased by $11,532,000  over the 1996 amount and net interest margin increased
to 6.36 % from the 1996 level of 6.12%.

    Non-Interest Income. Non-interest income increased $24,000 to $1,091,000 for
1997 from $1,067,000 for 1996.

    Non-Interest Expense.  Non-interest expense increased $450,000 to $2,957,000
in 1997 from  $2,507,000 in 1996. The increase  includes an increase of $138,000
in salaries,

                                       68


<PAGE>



wages and  employee  benefits for  increased  staffing  and wage  increases,  an
increase  of  $37,000  in  net  occupancy   expense  which  includes   increased
depreciation  and equipment  costs  associated  with  expansion into the Cripple
Creek  market,  and an increase of $275,000  in other  expenses  which  includes
additional expense for advertising, ATM costs and administrative costs.

    Provision  for Loan  Losses.  The Bank's  provision  for loan losses for the
periods   ended   December  31,  1997  and  1996  was  $180,000  and   $193,000,
respectively.

    Income Taxes.  The Company's income tax expense for the years ended December
31, 1997 and 1996 was $24,000 and $727,000, respectively. The Company elected to
report its income for tax purposes  under the  provisions of Subchapter S of the
Internal Revenue Code effective  January 1, 1997. Thus in 1997, the income taxes
were the responsibility of the stockholders and were not taxable to the Company.
The $24,000 of tax  reported  for the year ended  December 31, 1997 was built-in
gains tax that was due because of Subchapter S election.  The effective tax rate
for the year ended December 31, 1996 was 35%.

Year Ended December 31, 1996 and 1995

    Overview.  Net  income  increased  $198,000  to  $1.350.000  for  1996  from
$1,152,000 for 1995. Net interest income increased  $635,000.  The provision for
loan losses  increased  by $133,000  in 1996 to $193,000  from  $60,000 in 1995.
Non-interest  income increased by $53,000 and non-interest  expense increased by
$243,000.  Return on average  assets and return on average equity were 1.97% and
22.67%, respectively,  for 1996 compared to 2.02% and 24.56%, respectively,  for
1995.

    Interest and Fee Income.  Interest income  increased  $997,000 to $5,665,000
for 1996 from $4,668,000 for 1995. Interest income from loans increased $839,000
and interest  income on securities  increased  $226,000 while interest income on
federal funds sold decreased by $68,000 in 1996. The increase in interest income
from loans was  primarily  due to an  increase  in total  loans  outstanding  of
$9,485,000 from 1995 to 1996. The average interest rates were relatively stable.
The increase in interest  income on securities was due to an increase in average
securities held of $1,583,000 from 1995 to 1996.

    Interest Expense.  Interest expense  increased  $362.()()0 to $l,955,000 for
1996 from $1,593,000 in 1995. The increase in interest expense was primarily due
to  greater  deposit  volume in 1996 as the  average  interest-bearing  deposits
increased by $12,261,000  from 1995 to 1996. The interest rates paid on deposits
were relatively unchanged.

    Net Interest Income.  Net interest income  increased  $635,000 to $3,710,000
for 1996 from  $3,075,000 for 1995.  Net interest  margin was 6.12% for 1996 and
6.17% for 1995.

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<PAGE>



    Non-Interest  Income.  Non-interest income increased $53,000 to 1,067,000 in
1996 from  $1,014,000  for 1995.  This  reflects a $102,000  decrease in service
charges and a $155,000 increase in other income.

    Non-Interest  Expense.  Non-interest  expense  increased  from  $243,000  to
$2,507,000  in 1996  from  $2,264,000  in 1995.  The  increase  of  $165,000  in
salaries,  wages and employee benefits resulted from increased staffing and wage
increases.  Additional  expenses  were also  incurred for equipment and supplies
associated with increases in volume at the bank.

    Provision for Loan Losses.  The Company's  provision for loan losses for the
periods ended December 31, 1996 and 1995 was $193,000 and $60,000, respectively.

    Income Taxes.  The Company's income tax expense For the years ended December
31, 1996 and 1995 was $727,000 and  $613,000,  respectively.  The  effective tax
rates were 35.0% and 34.7% for 1996 and 1995, respectively.

LIQUIDITY AND SOURCES OF FUNDS

    The Bank's  primary  sources of funds are customer  deposits,  maturities of
investment  securities and loan repayments.  These funds are used to make loans,
acquire investment securities and other assets and to fund the operations of the
Bank. During the period ending June 30, 1998,  deposits increased to $81,792,000
from $68.931,000 at June 30, 1997. Deposits increased to $76,644,000 at December
31, 1997 from  $67,499,000  at December  31,  1996.  None of the  deposits  were
brokered  funds.  The Bank enjoys a  comfortable  mix/source of deposits with no
large concentration from any single source. Management believes the increases in
the deposits were due to the Bank's presence and image in the market place along
with the overall  strong growth in the Teller  County/E1 Paso County areas which
remain  very  strong  economies.  At June 30,  1998 net loans  were  $54,279,000
compared to  $53,885,000  at June 30, 1997. At December 31, 1997, net loans were
$50,703,000 compared to $44,928,000 at December 31, 1996.

    Bank management anticipates that the Bank will continue to rely primarily on
customer deposits, unpledged investment securities, loan repayments and retained
earnings to provide a strong source of liquidity  because of the high percentage
of core  deposits.  As a  secondary,  backup  source of funds,  management  uses
federal funds purchased and the Bank has a $2,000,000 borrowing line at Bankers'
Bank of the  West  as well as  summer  seasonal  borrowing  line at The  Federal
Reserve Bank.

CAPITAL RESOURCES

    The Company's total stockholders' equity increased to $7,971,000 at December
31, 1997 from $6,605,000 at December 31, 1996. This is an increase  of$1,111,000
and is the  result  of  increased  retained  earnings.  At June  30,  1998,  the
Company's total stockholders'

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<PAGE>



equity was $8,384,000.  At December 31, 1997,  stockholders' equity was 9.34% of
total assets compared to 8.84% of total assets at December 31, 1996. At June 30,
1998,  stockholders'  equity  was  9.23% of total  assets.  Dividends  paid were
$1,020,000 and $0 in 1997 and 1996, respectively.

Management expects no material change in this dividend policy.

    The Federal  Reserve Board and FDIC  guidelines call for a 4% Tier 1 capital
to risk-weighted asset ratio, 8% total capital to risk-weighted asset ratio, and
a 5% leverage ratio. The following table sets forth the Company's and the Bank's
capital ratios at December 31, 1997.

<TABLE>
<CAPTION>
Bank                                             June 30, 1998        December 31, 1997 
- ----                                             -------------        ----------------- 
                                                                                                   
<S>                                             <C>                      <C>                  
Tier 1 capital                                   $ 8,216,242              $ 7,560,730          
Total capital (including allowance)                9,066,464                8,371,667          
Risk-Weighted Assets                              59,633,705               56,352,183          
Tier 1 Capital to Risk-Weighted Assets                 13.8%                    13.4%          
Total Capital to Risk-Weighted Assets                  15.2%                    14.9%          
Leverage Ratio                                         10.6%                     9.6%          
</TABLE>

The Company anticipates no material capital expenditures.

EFFECTS OF INFLATION AND CHANGING PRICES

    The primary  impact of inflation on the Bank's  operations  is the effect it
has on operating  costs.  Unlike most  industrial  companies,  almost all of the
Bank's  resources  are  monetary in nature.  As a result,  increases in interest
rates have more of an impact on the Bank (and  therefore  the Company) than does
inflation.  Although interest rates do not necessarily track with inflation, the
Federal  Reserve has  generally  used an  increase  in interest  rates to dampen
inflation.  The  effects of  inflation  can  magnify the growth of assets in the
banking industry. This could serve to cause the demands on capital to be greater
than would otherwise be necessary.

                    COMPARISON OF THE RIGHTS OF SHAREHOLDERS
                            OF ZIONS AND THE COMPANY

GENERAL

    Upon  consummation of the  Reorganization,  shareholders  of the Company,  a
Colorado  corporation,  will become  shareholders of Zions, a Utah  corporation.
Thus,  the  Utah  Revised  Business  Corporation  Act  and  Zions'  Articles  of
Incorporation  ("Articles")  and Bylaws  will  govern the rights of the  Company
shareholders who become Zions shareholders.  In addition, since the Articles and
Bylaws of Zions and the Company are not the same, the Reorganization will result
in certain  differences  in the rights of the holders of Company  Common  Stock.
Following is a summary of certain significant differences.

                                       71


<PAGE>



AUTHORIZED CAPITAL

    Zions'  Articles  authorize a total of 203,000,000  shares of capital stock,
divided into two classes:  200,000,000 shares of common stock, without par value
("Zions Common Stock"),  and 3,000,000  shares of preferred  stock,  without par
value.  Each holder of Zions Common Stock is generally  entitled to one vote for
each share held of record on all matters  submitted to a shareholder  vote,  and
holders of a majority of the outstanding shares of Zions Common Stock constitute
a quorum for transacting business.

    The authorized  shares of preferred stock are issuable in one or more series
on the terms set by the  resolution or  resolutions of the Board of Directors of
Zions  providing  for the  issuance  of such  preferred  stock.  Each  series of
preferred  stock  would have such  dividend  rate,  which  might or might not be
cumulative,  such voting  rights,  which  might be general or special,  and such
liquidation  preferences,  redemption and sinking funds  provisions,  conversion
rights or other rights and  preferences,  if any, as the Board of Directors  may
determine. Except for such rights as may be granted to the holders of any series
of preferred stock in the resolution  establishing such series or as required by
law,  all of the voting and other  rights of the  shareholders  of Zions  belong
exclusively to the holders of common stock.

    Zions has  reserved  160,000  shares of  Participating  Preferred  Stock for
issuance upon exercise of the Rights under Zions' Shareholder Rights Plan.

    The Company's  Articles of  Incorporation  authorize 50,000 shares of common
stock,  par value of $20.00 per share ("Company  Common  Stock").  The Company's
Articles do not authorize the Company to issue preferred  stock.  Each holder of
Company  Common Stock is entitled to one vote for each share held on all matters
submitted to the  shareholders for a vote. A majority of votes cast shall decide
each matter submitted to the  shareholders at any shareholder  meeting except in
cases where,  by law, a larger vote is required.  The presence,  in person or by
proxy, of the holders of a majority of the outstanding  shares of Company Common
Stock  constitutes a quorum for the  transaction of business at any  shareholder
meetings.

ANTI-TAKEOVER MATTERS

    Utah and  Colorado  Law.  Utah's only  anti-takeover  statute is the Control
Shares  Acquisitions  Act, which is discussed below.  Colorado law, on the other
hand, does not include any anti-takeover statutes.

    Utah law provides that the voting rights to be accorded  Control  Shares (is
defined  below)  of a  Utah  corporation  that  has  (i)  one  hundred  or  more
shareholders,  (ii) its principal place of business,  its principal  office,  or
substantial  assets  in  Utah,  and  (iii)  either  (a)  more  than  10%  of its
shareholders  reside  in Utah,  (b) more  than 10% of its  shares  owned by Utah
residents,  or (c) 10,000  shareholders  residing in Utah, must be approved by a
majority of each

                                       72


<PAGE>



class of voting  securities of the  corporation,  excluding those shares held by
interested persons, before the Control Shares will be granted any voting rights.

    "Control  Shares" are defined under Utah law as shares acquired by a person,
either  directly  or  indirectly,  that when  added to all  other  shares of the
issuing  corporation  owned by such a  person,  would  entitle  such  person  to
exercise,  either  directly or  indirectly,  voting  power of 20% or more of all
voting power of the  corporation's  voting  securities.  Such  provisions do not
apply to shares  acquired  under,  among other  things,  an agreement or plan of
merger or share exchange effected in compliance with the relevant  provisions of
Utah's Revised Business  Corporation Act and to which the corporation is a party
or an acquisition of shares previously approved by the board of directors of the
corporation.

    In  addition,  unless  otherwise  provided  in a  corporation's  articles of
incorporation or bylaws, in the event Control Shares acquired in a control share
acquisition  are  accorded  full  voting  rights  and the  acquiring  person has
acquired  Control  Shares  with a  majority  or more of all  voting  power,  all
shareholders of the issuing public corporation will have dissenters' rights.

    Special Votes for Certain  Transactions.  Zions' Articles contain provisions
requiring special shareholder votes to approve certain types of transactions. In
the absence of these provisions,  either the transactions would require approval
by a majority of the shares voted at a meeting or no  shareholder  vote would be
required.

    Zions' Articles require that certain "business  transactions"  between Zions
or a subsidiary and a "related  person" be approved by the affirmative  votes of
the holders of not less than 80 percent of the voting  power of all  outstanding
voting  stock of Zions.  A  "related  person"  is  generally  defined  by Zions'
Articles to mean a person, corporation,  partnership, or group acting in concert
that  beneficially  owns 10% or more of the voting  power of Zions'  outstanding
voting stock.

    The  "business  transactions"  with a "related  person" which are subject to
Zions' special vote requirements include (1) a merger or consolidation involving
Zions or a  subsidiary  of Zions  with a related  person;  (2) the sale,  lease,
exchange,  transfer or other  disposition of all or any substantial  part of the
assets of either Zions or a subsidiary of Zions to, with or for the benefit of a
related person; (3) the issuance,  sale,  exchange or other disposition by Zions
or a  subsidiary  of Zions  to a  related  person  of  securities  of Zions or a
subsidiary of Zions having an aggregate fair market value of $5 million or more;
(4) any liquidation,  spinoff, splitoff,  splitup, or dissolution of Zions by or
on behalf of a related person; (5) any  recapitalization  or reclassification of
the  securities  of Zions or other  transaction  that  would  have the effect of
increasing the voting power of a related person or reducing the number of shares
of each class of voting securities outstanding; and (6) any agreement, contract,
or other arrangement providing for any of the transactions set forth above.


                                       73

<PAGE>



    Zions' special shareholder vote requirements for business  transactions with
related  persons do not apply to any  transaction  approved by a majority of the
continuing  directors,  or if various specified conditions are met. A continuing
director  is any  member  of the Zions  Board who is not a related  person or an
interested  shareholder or an affiliate or associate of a related person and who
(1) was a director on February 21, 1986 or (2) became a director  subsequent  to
that date and whose election or nomination  for election by Zions'  shareholders
was approved by a majority of the continuing directors then on the Board.

    The  Company's  Articles do not contain  any  provision  requiring a special
shareholder vote to approve certain types of transactions.

SHAREHOLDER RIGHTS PLAN

    The Board of  Directors of Zions in  September  1996  adopted a  Shareholder
Protection  Rights Plan and declared a dividend of one Right on each outstanding
share of Zions Common Stock.  The Rights Plan was not adopted in response to any
specific  effort to acquire  control of Zions.  Rather,  it was adopted to deter
abusive  takeover  tactics that can be used to deprive  shareholders of the full
value of their investment.

    Until it is  announced  that a person or group has  acquired  10% or more of
Zions Common Stock (an "Acquiring Person") or commenced a tender offer that will
result in such person or group  owning 10% or more of Zions  Common  Stock,  the
Rights will be evidenced by the Common Stock  certificates,  will  automatically
trade with the Common Stock and will not be  exercisable.  Thereafter,  separate
Rights  certificates  will be distributed and each Right will entitle its holder
to purchase  Participating  Preferred  Stock  having  economic  and voting terms
similar to those of Zions 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 Board may decide)
(the  "Flip-in  Date") each Right (other than Rights  beneficially  owned by any
Acquiring Person or transferees thereof,  which Rights become void) will entitle
its holder to  purchase,  for the  exercise  price,  a number of shares of Zions
Common Stock or Participating Preferred Stock having a market value of twice the
exercise price.

    Also, if after an Acquiring  Person controls Zions' Board of Directors Zions
is  involved  in a merger or sells more than 50% of its assets or earning  power
(or has entered an agreement to do any of the  foregoing)  and, in the case of a
merger,  the Acquiring  Person will receive  different  treatment than all other
shareholders  or the person with whom the merger occurs is the Acquiring  Person
or a person affiliated or associated with the Acquiring Person,  each Right will
entitle its holder to purchase,  for the exercise  price,  a number of shares of
common stock of the Acquiring Person having a market value of twice the exercise
price.  If any person or group acquires  between 10% and 50% of the Zions Common
Stock, Zions' Board of Directors may, at its option, exchange one share of Zions
Common Stock for each Right.

                                       74


<PAGE>



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

    The Company has no shareholder rights plan.

BOARD OF DIRECTORS

    Director Liability and Indemnification.  Zions' Articles contain a "director
liability"  provision.  The provision generally shields a director from monetary
damages  to  Zions  or its  shareholders  for a breach  of  fiduciary  duty as a
director other than (i) a breach of a director's  duty of loyalty,  (ii) acts or
omissions not taken in good faith or which involve  intentional  misconduct or a
knowing  violation of law, (iii)  authorizing the unlawful payment of dividends,
and (iv) transactions in which a director receives an improper benefit.

    The Company's Articles contain a similar director liability  provision.  The
provision  generally  shields a director from monetary damages to the Company or
its  shareholders  for a breach of fiduciary duty as a director other than (i) a
breach of a director's duty of loyalty, (ii) acts or omissions not taken in good
faith or which involve intentional misconduct or a knowing violation of law, and
(iii)  transactions in which a director  receives an improper  personal benefit.
The  Company's  Articles  further  provide  that the  Company  has the  power to
indemnify a director, officer, employee or agent in connection with a proceeding
to the full extent  permitted by Colorado law. The Company's Bylaws provide that
the  Company  has  the  power  to  indemnify  directors  against  judgments  and
accompanying reasonable litigation expenses, except in relation to matters where
a  director  is liable  to the  Company  or  liable on the basis  that he or she
received an improper personal benefit. The Company's Bylaws further provide that
the Company can indemnify and advance expenses to an officer,  employee or agent
of the Company to the same or greater  extent as to a director.  The Company may
also purchase and maintain insurance on behalf of a director, officer, employee,
fiduciary or agent of the Company for any liability asserted against or incurred
by him or her in such capacity,  regardless of whether the Company has the power
to indemnify him or her against such liability.

    Classified  Board.  Zions' Articles divide the Board of Directors into three
classes, each consisting of one-third (or as near as may be) of the whole number
of  directors.  Utah law requires  that each class  contain as equal a number of
directors as possible.  One class of directors is elected at each annual meeting
of shareholders, and each class serves for a term of three years.

    The number of directors which constitute  Zions' full Board of Directors may
be increased or decreased only by amendment of the Bylaws,  which requires the a
affirmative vote of two-thirds of the total number of directors constituting the
entire Board, or by the shareholders of Zions at a regular or special meeting by
the affirmative vote of two-thirds of the outstanding and issued shares entitled
by statute to vote. Except as otherwise required by


                                       75

<PAGE>



law, vacancies on Zions' Board of Directors,  including vacancies resulting from
an increase in the size of the Board, may be filled by the affirmative vote of a
majority of the remaining  directors even though less than a quorum of the Board
of Directors.  Zions' directors elected by the Board to fill vacancies serve for
the full remainder of the term of the class to which they have been elected. Any
directorship  filled by reason of an increase in the number of directors  may be
filled for a term of office continuing only until the next election of directors
by the shareholders.

    The Company's  Articles and Bylaws do not provide for a classified  Board of
Directors.  Instead,  the  Company's  Bylaws  provide  for a Board of  Directors
consisting  of  not  less  than  three  individuals,  who  are  elected  at  the
shareholders  annual meeting by a majority vote, for a one year term. The Bylaws
authorize  the Board of Directors to fix the number of directors by  resolution.
Any vacancy  occurring on the Company's  Board may be filled by the  affirmative
vote of a majority of the remaining directors, and any director so elected shall
hold office for the unexpired term of his predecessor in office.

    Cumulative  Voting.  Neither  Zions  nor  the  Company's  shareholders  have
cumulative voting rights in the election of directors. The absence of cumulative
voting means that a nominee for  director  must receive the votes of a plurality
of the shares voted in order to be elected.

    Removal of  Directors.  Zions'  Articles  provide  that any director (or the
entire Board of Directors) may be removed from office by  shareholder  vote only
if such  removal is  approved  by the  holders of  two-thirds  of the issued and
outstanding shares then entitled to vote at an election of directors.

    The  Company's  Bylaws  provide  that the entire  board of  directors or any
individual director may be removed from office at a shareholders  meeting called
expressly for that purpose by a majority vote of the shares  entitled to vote at
an election of directors.

SPECIAL SHAREHOLDERS' 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 for consideration at the special
meeting. Under Zions' Bylaws, special meetings may be called by the President or
by the Board of Directors.

    The Company's Bylaws permit special meetings of shareholders to be called at
any time by the Chairman of the Board of Directors, by the President, by a Board
of  Directors  resolution,  or by the holders of not less than 10% of all shares
entitled to vote at the meeting.

                                       76


<PAGE>



AMENDMENT OF ARTICLES AND BYLAWS

    Zions' Articles require the affirmative  votes of  the holders of two-thirds
of all outstanding voting stock of Zions to approve certain amendments to Zions'
Articles,  except  that to  repeal  or  amend  the  provisions  in the  Articles
regarding  business  transactions  with related persons requires the affirmative
vote of 80% of the issued and outstanding  stock entitled to vote. Zions' Bylaws
may be amended  by an  affirmative  vote of  two-thirds  of the total  number of
directors constituting the entire Board or by the affirmative vote of a majority
of the issued and outstanding  shares entitled to vote,  provided,  however,  an
affirmative vote of two-thirds of the issued and outstanding  shares entitled to
vote shall be required if the amendment would restrict, limit or alter the power
or authority  of the board of directors or any other  officer or agent of Zions;
would  vest any  powers of Zions in any other  officer  or agent  other than the
board of directors,  or officers and agents  appointed by or under the authority
of the board of  directors;  would require the approval of any  shareholders  in
order for the board of directors or any officer or agent to take any action;  or
would change the number of directors, the quorum requirements for any meeting of
the board of  directors,  the vote by which it must act in  connection  with any
matter, the manner of calling or conducting meetings of directors,  or the place
of such meetings.

    The Company's  Articles do not discuss  amendments  to the Articles.  In the
absence of such a  provision,  Colorado law  requires  the  affirmative  vote of
two-thirds of all outstanding  voting stock of the Company in order to amend the
Articles. The Company's Bylaws may be amended by the Board of Directors, subject
to repeal or change by action of the shareholders.

DISSENTERS' RIGHTS

    Zions  is  incorporated  under  the  laws of Utah.  Utah  law  provides  for
dissenters' rights in a variety of transactions  including:  (i) consummation of
any plan of merger to which a  corporation  is a party  (other  than  mergers or
consolidations  not requiring a shareholder  vote); (ii) consummation of certain
sales,  leases,  exchanges or other  dispositions of all or substantially all of
the assets of a corporation;  and (iii) consummation of certain share exchanges.
However,  shareholders  of a Utah  business  corporation  are  not  entitled  to
dissenters' rights in any of the transactions  mentioned above if their stock is
either listed on a national  securities exchange or on the Nasdaq NMS or held of
record by 2,000 or more shareholders. The aforementioned provisions do not apply
if the shareholder will receive for his shares anything except (a) shares of the
corporation  surviving the consummation of the plan of merger or share exchange,
(b)  shares of a corporation  whose  shares arc listed on a national  securities
exchange or the Nasdaq NMS or held of record by not less than 2,000 holders,  or
(c) cash in lieu of fractional  shares.  Zions Common Stock  currently is listed
for  trading in the Nasdaq NMS and has more than 2,000  shareholders  of record.
See  "Plan or  Reorganization--Rights  of  Dissenting  Shareholders"  for a more
detailed discussion of dissenters' rights under Colorado law.

                                       77


<PAGE>



    The Company is  incorporated  under Colorado law.  Colorado law provides for
dissenters' rights to any shareholder of a Colorado  corporation in the event of
any of the following  corporate  actions:  (i) consummation of a merger to which
the  corporation is a party if approval by the  shareholders is required for the
merger  or the  corporation  is a  subsidiary  that is  merged  with its  parent
corporation;  (ii) consummation of a plan of exchange where the corporation is a
party as the corporation whose shares will be acquired;  (iii) consummation of a
disposition of all or  substantially  all of the property of the corporation for
which a shareholder vote is required;  (iv) consummation of a disposition of all
or substantially  all of the property of an entity controlled by the corporation
if the  shareholders of the  corporation  were entitled to vote upon the consent
of  the  corporation to such  disposition;  or (v) in the event of any corporate
action to the extent provided by the bylaws or a board resolution.  Colorado law
regarding  dissenters' rights contains the same provisions as Utah law described
in the third and fourth sentences of the previous paragraph.

PREEMPTIVE RIGHTS

    Holders of Zions Common Stock do not have the  preemptive  right to purchase
unissued or treasury  shares of Zions  Common Stock or any other  securities  of
Zions  in the  event  of an  issuance  of  Zions  Common  Stock  or  such  other
securities.

    The Company's Articles provide that holders of the Company Common Stock have
the preemptive right to subscribe to any additional  unissued stock or any other
securities which the Company may offer, now or hereafter authorized.

DIVIDEND RIGHTS

    Utah law generally  allows a  corporation,  subject to  restrictions  in its
articles of incorporation, to declare and pay dividends in cash or property, but
only if the  corporation is solvent and payment would not render the corporation
insolvent. Zions' Articles place no further restrictions on distributions. Thus,
the holders of Zions  Common Stock are  entitled to  dividends  when,  as and if
declared by the Board of  Directors  out of funds  legally  available  therefor.
However, if Zions preferred stock is issued, the Board of Directors of Zions may
grant  preferential  dividend  rights to the  holders of such stock  which would
prohibit  payment of dividends on Zions Common Stock unless and until  specified
dividends on the preferred stock have been paid.

    Colorado law generally  allows a corporation  to make  distributions  to its
shareholders in cash,  property or its own shares.  However, no distribution may
be made if, after giving it effect: (i) the corporation would not be able to pay
its debts as they become due in the usual course of business;  or (ii) except as
otherwise  specifically a1lowed by the corporation's  articles of incorporation,
the  corporation's  total  assets  would  be  less  than  the  sum of its  total
liabilities plus the amount that would be needed,  if the corporation were to be
dissolved at the time of distribution,  to satisfy the preferential  rights upon
dissolution  of  shareholders  whose  preferential  rights are superior to those
receiving the distribution. The Company's Articles do

                                       78


<PAGE>



not contain any other specific allowance.  Thus, holders of Company Common Stock
are entitled to distributions when, as and if declared by the Board of Directors
out of funds legally available therefor.

LIQUIDATION RIGHTS

    Upon liquidation,  dissolution or winding up of Zions,  whether voluntary or
involuntary,  the holders of Zions Common Stock are entitled to share ratably in
the assets of the corporation  available for distribution  after all liabilities
of the corporation have been satisfied. However, if preferred stock is issued by
Zions, the Board of Directors may grant  preferential  liquidation rights to the
holders of such stock which would  entitle  them to be paid out of the assets of
Zions available for distribution  before any distribution is made to the holders
of Zions Common Stock.

    Upon  liquidation,  dissolution  or  winding  up  of  the  Company,  whether
voluntary or  involuntary,  the holders of Company  Common Stock are entitled to
share ratably in the assets of the corporation  available for distribution after
all liabilities of the corporation have been satisfied.

MISCELLANEOUS

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

LEGAL OPINIONS

    An opinion  with respect to certain  legal  matters in  connection  with the
Reorganization  will be rendered by Duane,  Morris & Heckscher LLP,  Washington,
D.C., as counsel for Zions.

EXPERTS

    The consolidated  financial  statements of Zions as of December 31, 1997 and
1996,  and for each of the years in the  three-year  period  ended  December 31,
1997,  have been  incorporated by reference in this  Registration  Statement and
Proxy Statement/Prospectus in reliance upon the report of KPMG Peat Marwick LLP,
independent  certified  public  accountants,  incorporated  by reference in this
Registration statement and Proxy Statement/Prospectus, and upon the authority of
such firm as experts in auditing and accounting.

    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 Sumitomo  Bank of  California  have been
audited by Arthur

                                       79


<PAGE>


Andersen LLP,  independent  certified public accountants,  as indicated in their
report (dated January 16, 1998), and have been incorporated by reference in this
Proxy  Statement/Prospectus  in reliance upon the report of said firm,  and upon
the authority of such firm as experts in auditing and accounting.

OTHER MATTERS

    The Company does not expect its  principal  accounants to attend the Special
Meeting.

    The management of the Company does not know of any other matters intended to
be presented for shareholder action at the Special Meeting.  If any other matter
does properly come before the Special Meeting and is put to a shareholder  vote,
the Proxies  solicited  hereby will be voted in accordance  with the judgment of
the proxy holder named on such Proxies.

                                           By Order of the Board of Directors,


                                           -------------------------------------
                                           James P. Oaks
                                           President and Chief Executive Officer
                                           Mountain Financial Holding Company


September ,1998



<PAGE>



                       MOUNTAIN FINANCIAL HOLDING COMPANY
                           CONSOLIDATED BALANCE SHEETS
                  JUNE 30, 1998 AND DECEMBER 31, 1997 AND 1996
             (AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                JUNE 30,       DECEMBER 31,
                                              ----------  ----------------------
                                                 1998       1997       1996
                                              ----------  -------   ------------

          ASSETS
          ------
<S>                                             <C>       <C>       <C>    
Cash and due from bankS                         $ 6,637   $ 6,241   $ 6,087
Federal funds sold                                7,855     3,320     3,825
                                                -------   -------   -------
     Total cash and cash equivalants             14,492     9,561     9,912
Securities:
     Held to maturity                             2,906     2,833     3,135
     Available for sale                          14,180    18,030    13,035
LOANS:
     Loan and leases receivable                  54,972    51,373    45,435
     [Less] Loan loss allowance                    [693]     [670]     [507]
                                                -------   -------   -------
         Total loans-net                         54,279    50,703    44,928
Bank premises and equipment-net                   2,998     2,868     2,315
Other assets                                      1,932     1,341     1,407   
                                                -------   -------   -------
Total assets                                    $90,787   $85,336   $74,732
                                                =======   =======   =======


         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------

Liabilities:
     Deposits:
         Demand                                 $13,550   $14,984   $12,159
         Now and money market                    33,263    28,447    24,657
         Savings                                  8,592     8,551     7,321
         Certificate's of deposit-other          15,104    14,454    12,731
         Certificate's of deposit
              $100,000 and over                  11,283    10,208    10,631
                                                -------   -------   -------
                  Total deposits                 81,792    76,644    67,499
     Other                                          611       721       628
                                                -------   -------   -------
         Total liabilities                       82,403    77,365    68,127
Stockholders' equity:
     Common stock, $20 par value: 50,000
         shares authorized, issued and
         outstanding                              1,000     1,000     1,000
     Additional paid-in capital                     694       694       694
     Retained earnings                            6,532     6,135     4,869
     Accumulated other comprehensive
            income                                  158       142        42
                                                -------   -------   -------
         Total stockholders' equity               8,384     7,971     6,605
                                                -------   -------   -------
     Total liabilities and stockholders'
          equity                                $90,787   $85,336   $74,732
                                                =======   =======   =======
</TABLE>


<PAGE>



                       MOUNTAIN FINANCIAL HOLDING COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                   SIX MONTHS ENDED JUNE 30, 1998 AND 1997 AND
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   JUNE 30,            DECEMBER 31,
                                             ------------------  ---------------------------
                                               1998      1997      1997      1996      1995
                                             --------  --------  --------  --------  -------
<S>                                          <C>       <C>       <C>       <C>       <C>    
Interest income:
     Interest and fees on loans              $ 2,881   $ 2,712   $ 5,570   $ 4,457   $ 3,618
     Interest on taxable investments             565       417       875       924       694
     Interest on non-taxable investment           47        38        76        71        75
     Federal funds sold                           81        65       168       208       276
     Other                                        --         3         4         5         5
                                             -------   -------   -------   -------   -------
         Total interest income                 3,574     3,235     6,693     5,665     4,668
Interest expense:
     Interest on depositS                      1,241     1,091     2,279     1,952     1,593
     Other                                         7         6         6         3        --
                                             -------   -------   -------   -------   -------
         Total interest expense                1,248     1,097     2,285     1,955     1,593
                                             -------   -------   -------   -------   -------
Net interest income                            2,326     2,138     4,408     3,710     3,075
Provision for loan losses                         20        90       180       193        60
                                             -------   -------   -------   -------   -------
Net interest income after provision
     for loan losses                           2,306     2,048     4,228     3,517     3,015
Non-interest income:
     Service charges                             277       280       560       519       621
     Other income                                382       239       531       548       393
                                             -------   -------   -------   -------   -------
         Total non-interest income               659       519     1,091     1,067     1,014
Non-interest expense:
     Salaries, wages and employee benefits       848       637     1,455     1,317     1,152
     Net occupancy expense                       181       163       352       315       269
     Other                                       519       600     1,150       875       843
                                             -------   -------   -------   -------   -------
         Total non-interest expense            1,548     1,400     2,957     2,507     2,264
                                             -------   -------   -------   -------   -------
Income before income taxes                     1,417     1,167     2,362     2,077     1,765
Income taxes  (S CORPORATION
     effective January 1, 1997)                   --        24        24       727       613
                                             -------   -------   -------   -------   -------
Net income                                     1,417     1,143     2,338     1,350     1,152
Other comprehensive income, net of tax-
      unrealized holding gains [losses]
      arising during the period                   16       [64]      100       [41]      121
                                             -------   -------   -------   -------   -------

Comprehensive income                         $ 1,433   $ 1,079   $ 2,438   $ 1,309   $ 1,273
                                             =======   =======   =======   =======   =======


Earnings per share:
     Net income                              $ 28.34   $ 22.86   $ 46.76   $ 27.00   $ 23.04
     Weighted average number of common
            shares outstanding                50,000    50,000    50,000    50,000    50,000
</TABLE>



<PAGE>



                       MOUNTAIN FINANCIAL HOLDING COMPANY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       SIX MONTHS ENDED JUNE 30, 1998 AND
                  YEARS ENDED DECEMBER 31, 1997, 1996 and 1995
                             (AMOUNTS IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                              ACCUMULATED
                                          COMMON STOCK   ADDITIONAL             OTHER
                                        ---------------   PAID IN  RETAINED  COMPREHENSIVE
                                        SHARES   AMOUNT   CAPITAL  EARNINGS     INCOME           TOTAL   
                                        ------   ------   -------  --------  -------------       -----   
                                                                                                          
<S>                                   <C>       <C>      <C>      <C>         <C>              <C>      
Balance - January 1, 1995                   50   $1,000   $  694   $2,367      $  [38]           $4,023   
     Net income                              -        -        -    1.152           -             1,152   
     Net change in unrealized                                                                             
          gain (loss) in available                                                                        
          for sale securities                         -        -        -         121               121   
                                         -----   ------   ------   ------      ------            ------   
                                                                                                          
Balance - December 31, 1995                 50    1,000      694    3,519          83             5,296   
                                                                                                          
     Net income                              -        -        -    1,350           -             1,350   
     Net change in unrealized                                                                             
          gain (loss) in available                                                                        
          for sale securities                -        -        -        -         [41]              [41]  
                                         -----   ------   ------   ------      ------            ------   
                                                                                                          
Balance - December 31, 1996                 50    1,000      694    4,869          42             6,605   
                                                                                                          
     Net income                              -        -        -    2,338           -             2,338   
     Dividends paid                          -        -        -   [1,072]          -            [1,072]  
     Net change in unrealized                                                                             
          gain (loss) in available                                                                        
          for sale securities                -        -        -        -         100               100   
                                         -----   ------   ------   ------      ------            ------   
                                                                                                          
Balance - December 31, 1997                 50    1,000      694    6,135         142             7,971   
                                                                                                          
     Net income                              -        -        -    1,417           -             1,417   
     Dividends paid                          -        -        -   [1,020]          -            [1,020]  
     Net change in unrealized                                                                             
          gain (loss) in available                                                                        
          for sale securities                -        -        -        -          16                16   
                                         -----   ------   ------   ------      ------            ------   
                                                                                                          
Balance - June 30, 1998                     50   $1,000   $  694   $6,532      $  158            $8,384   
                                         =====   ======   ======   ======      ======            ======   
</TABLE>
                                                                         

<PAGE>



                                   APPENDIX A

                      AGREEMENT AND PLAN OF REORGANIZATION

     THIS AGREEMENT AND PLAN OF  REORGANIZATION  made as of the 14th day of May,
1998, among ZIONS  BANCORPORATION  ("Zions Bancorp"),  a Utah corporation having
its principal office in Salt Lake City, Utah, VAL COR BANCORPORATION, INC. ("Val
Cor"), a Colorado  corporation having its principal office in Cortez,  Colorado,
BANK COLORADO,  NATIONAL  ASSOCIATION  ("BCNA"),  a national banking association
organized  under  the laws of the  United  States,  MOUNTAIN  FINANCIAL  HOLDING
COMPANY (the "Company"),  a Colorado  corporation having its principal office in
Woodland Park,  Colorado,  and MOUNTAIN  NATIONAL BANK (the "Bank"),  a national
banking association organized under the laws of the United States

                          W I T N E S S E T H  T H A T :

     WHEREAS,  the Company is a bank holding company and the sole shareholder of
the Bank;

     WHEREAS,  Zions Bancorp is a bank holding company and the sole  shareholder
of Val Cor;

     WHEREAS,  Val Cor is a bank  holding  company and the sole  shareholder  of
BCNA;

     WHEREAS,  Zions  Bancorp  and Val Cor each  desire  to  affiliate  with the
Company through the merger of the Company with and into Val Cor, with Val Cor to
be the surviving corporation (the "Holding Company Merger") and, in addition, to
cause the merger of the Bank with and into BCNA,  with BCNA to be the  surviving
national banking association (the "Bank Merger");

     WHEREAS, the Board of Directors of the Company has determined that it would
be in the best  interests of the Company,  its  shareholders,  its customers and
those of the Bank and the  areas  served by the  Company  and the Bank to become
affiliated  with Zions Bancorp  through the Holding  Company Merger and to cause
the Bank Merger;

     WHEREAS,  the  respective  boards  of  directors  of BCNA and the Bank have
determined  that it would be in the best  interests of BCNA or the Bank,  as the
case may be, its shareholders and customers, for BCNA and the Bank to merge with
each other;

     WHEREAS,  the respective Boards of Directors of Zions Bancorp, Val Cor, and
the  Company  have agreed to cause the Holding  Company  Merger  pursuant to the
provisions  of section  7-111-101 et seq. of the Colorado  Business  Corporation
Act, and to cause the Bank Merger  pursuant to the provisions of section 215a of
the National Bank Act (12 U.S.C. section 215a)


<PAGE>



     WHEREAS,  the  respective  Boards  of  Directors  of BCNA and the Bank have
agreed to cause the Bank Merger  pursuant to the  provisions  of section 215a of
the National Bank Act; and


     WHEREAS,  the parties  intend that the Holding  Company Merger and the Bank
Merger qualify as one or more tax-free  reorganizations  under section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");

     NOW,  THEREFORE,   in  consideration  of  these  premises  and  the  mutual
agreements hereinafter set forth, the parties agree as follows:

1.   COMBINATIONS.

     1.1. Form of Combinations.

               (a) Val Cor and the Company will execute a merger  agreement (the
"Holding  Company  Merger  Agreement")  substantially  in the form of  Exhibit I
annexed  hereto.  Subject  to the  provisions  of  the  Holding  Company  Merger
Agreement,  the  Company  will be  merged  with and into Val Cor in the  Holding
Company Merger with Val Cor as the surviving  corporation.  The shares of common
stock,  $20.00 par value,  of the Company (the "Company  Common Stock") shall be
canceled and  immediately  converted  into the right to receive,  subject to the
terms,  conditions,  and limitations set forth herein,  such consideration as is
provided in section 1.2(a) hereof.

               (b) BCNA and the Bank will execute a merger  agreement (the "Bank
Merger  Agreement")  substantially  in the form of Exhibit  II  annexed  hereto.
Immediately  following the  effectiveness  of the Holding  Company  Merger,  and
subject to the provisions of the Bank Merger Agreement,  the Bank will be merged
with and into  BCNA in the  Bank  Merger  with  BCNA as the  surviving  national
banking association. The shares of common stock of the Bank shall be canceled.

         1.2.  Consideration  for Holding Company Merger.  Subject to the terms,
conditions,  and  limitations  set forth  herein,  upon  surrender of his or her
certificate or certificates  in accordance with Section 1.1 hereof,  each holder
of shares of Company Common Stock shall be entitled to receive,  in exchange for
each share of Company Common Stock held of record by such  stockholder as of the
Effective Date,  that number of shares of the common stock of Zions Bancorp,  no
par value (the "Zions  Bancorp  Stock")  calculated  by dividing  608,000 by the
total  number  of  shares of  Company  Common  Stock  that  shall be issued  and
outstanding at the Effective Date.


                                      A-2
<PAGE>


         1.3. No  Fractional  Shares.  Zions  Bancorp will not issue  fractional
shares of its stock.  In lieu of fractional  shares of Zions Bancorp  Stock,  if
any, each  shareholder  of the Company who is entitled to a fractional  share of
Zions Bancorp Stock shall receive an amount of cash equal to the product of such
fraction  times $51.50.  Such  fractional  share  interest shall not include the
right to vote or to receive dividends or any interest thereon.

         1.4.  Dividends;  Interest.  No  shareholder  of the  Company  will  be
entitled to receive  dividends on his or her Zions Bancorp Stock until he or she
exchanges his or her  certificates  representing  Company Common Stock for Zions
Bancorp  Stock.  Any  dividends  declared on Zions  Bancorp  Stock to holders of
record  on or after  the  Effective  Date  shall,  with  respect  to stock to be
delivered pursuant to this Agreement to shareholders of the Company who have not
exchanged their certificates representing Company Common Stock for Zions Bancorp
Stock,  be paid to the  Exchange  Agent (as  designated  in Section  1.5 of this
Agreement)  and,  upon  receipt  from a former  shareholder  of the  Company  of
certificates  representing  shares of Company  Common Stock,  the Exchange Agent
shall  forward  to such  former  shareholder  of the  Company  (i)  certificates
representing his or her shares of Zions Bancorp Stock,  (ii) dividends  declared
thereon  subsequent to the Effective Date (without  interest) and (iii) the cash
value of any fractional shares determined in accordance with Section 1.3 hereof.

         1.5.  Designation of Exchange Agent.

                  (a) The parties of this Agreement hereby designate Zions First
National Bank, a national  banking  association  with its head office located in
Salt Lake City,  Utah ("Zions  Bank") as Exchange  Agent to effect the exchanges
contemplated hereby.

                  (b) Zions Bancorp  will,  promptly  after the Effective  Date,
issue and deliver to Zions Bank the share  certificates  representing  shares of
Zions Bancorp  Stock and the cash to be paid to holders of Company  Common Stock
in accordance with this Agreement.

         1.6. Notice of Exchange.  Promptly after the Effective Date, Zions Bank
shall  mail to each  holder of one or more  certificates  formerly  representing
Company  Common  Stock  except to such  holders as shall have  waived the notice
required  by this  Section  1.6,  a notice  specifying  the  Effective  Date and
notifying  such holder to surrender his or her  certificate or  certificates  to
Zions Bank for exchange.  Such notice shall be mailed to holders by regular mail
at their addresses on the records of the Company.

         1.7. Treatment of Stock Options.  Each stock option to purchase Company
Common Stock not exercised  prior to the Effective Date shall  automatically  be
canceled on and as of the Effective Date.



                                      A-3
<PAGE>

         1.8. Voting Agreements.  Simultaneously  herewith,  each shareholder of
the Company who is listed on Schedule  1.8 annexed  hereto shall each enter into
an agreement with Zions Bancorp, substantially in form and substance as that set
forth as  Exhibit  III  attached  hereto,  in which he or she agrees to vote all
shares  of  Company  Common  Stock  which  may be  voted,  or whose  vote may be
directed,  by him or her,  in favor  of the  transactions  contemplated  by this
Agreement  at the meeting of  shareholders  at which such  transaction  shall be
considered.

         1.9. Employee  Benefits.  If any employee of the Company or of the Bank
becomes a participant in any  employment  benefit plan,  practice,  or policy of
Zions Bancorp, such employee shall be given credit under such plan, practice, or
policy for all service prior to the Effective  Date with the Company or the Bank
for purposes of eligibility and vesting  (including  credit for service with the
Company or the Bank for purposes of eligibility for specific  numbers of days of
vacation leave and sick leave per year),  but not for benefit accrual  purposes,
for which such service is taken into account or recognized,  provided that there
be no duplication  of such benefits as are provided  under any employee  benefit
plans, practices, or policies of the Company or the Bank that continue in effect
following the Effective Date.

2.       EFFECTIVE DATE.

         The Effective Date shall be the date which is the latest of:

         2.1. Shareholder  Approval.  The day upon which the shareholders of the
Company approve, ratify, and confirm the Holding Company Merger; or

         2.2. Federal  Reserve  Approval.  The  first  to occur of  (a) the date
thirty days  following  the date of the order of the Board of  Governors  of the
Federal  Reserve  System or the Federal  Reserve  Bank of San  Francisco  acting
pursuant to  authority  delegated to it by the Board of Governors of the Federal
Reserve System  (collectively,  the "Board of Governors")  approving the Holding
Company Merger,  or (b) if,  pursuant to section 321(a) of the Riegle  Community
Development and Regulatory Improvement Act of 1994 (the "Riegle Act"), the Board
of Governors shall have prescribed a shorter period of time with the concurrence
of the  Attorney  General of the United  States,  the date on which such shorter
period of time  shall  elapse,  or (c) the date ten days  following  the date on
which the Board of  Governors  indicates  its  waiver of  jurisdiction  over the
Holding Company Merger; or

         2.3. OCC  Approval.  The  first to occur of  (a) the date  thirty  days
following the date of the order of the Office of the Comptroller of the Currency
(the "OCC") approving the Bank Merger,  or (b) if, pursuant to section 321(b) of
the Riegle Act, the OCC shall have  prescribed a shorter period of time with the
concurrence of the Attorney General of the United States, the date on which such
shorter period of time shall elapse; or


                                      A-4

<PAGE>



         2.4. Utah Commissioner  Approval. If such an order shall be required by
law, the date ten days  following the date of the order of the  Commissioner  of
Financial  Institutions of the State of Utah (the "Commissioner")  approving the
transactions contemplated by this Agreement; or

         2.5. Colorado  Banking  Board  Approval.  If such  an  order  shall  be
required  by law,  the  date  ten days  following  the date of the  order of the
Colorado State Banking Board (the "Banking  Board")  approving the  transactions
contemplated by this Agreement; or

         2.6. Other Regulatory Approvals. The date upon which any other material
order,  approval,  or  consent  of a federal  or state  regulator  of  financial
institutions or financial institution holding companies authorizing consummation
of the  transactions  contemplated  by this Agreement is obtained or any waiting
period mandated by such order, approval, or consent has run; or

         2.7.  Expiration of Stays.  Ten days after any stay of the approvals of
any of the Board of Governors,  the OCC, the Commissioner,  or the Banking Board
of the  transactions  contemplated  by this Agreement or any injunction  against
closing of said transactions is lifted, discharged, or dismissed; or

         2.8. Mutual  Agreement.  Such other date as shall be mutually agreed to
by Zions Bancorp and the Company.

3.       CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF THE PARTIES.

         The  obligations  of  Zions  Bancorp,  Val  Cor,  and  the  Company  to
consummate the Holding  Company Merger and the  obligations of BCNA and the Bank
to  consummate  the Bank Merger  shall be subject to the  conditions  that on or
before the Effective Date:

         3.1. Regulatory Approvals. Orders, consents, and approvals, in form and
substance reasonably  satisfactory to Zions Bancorp and the Company,  shall have
been entered by the requisite governmental  authorities,  granting the authority
necessary for  consummation of the  transactions  contemplated by this Agreement
and the  operation by Zions  Bancorp and Val Cor of the business of the Company,
the business of the Bank, and each of the branches of the Bank,  pursuant to the
provisions of applicable law; and all other requirements prescribed by law or by
the rules and regulations of any other regulatory  authority having jurisdiction
over such transactions shall have been satisfied.

         3.2. Absence of Litigation.  No action,  suit, or proceeding shall have
been  instituted  or  shall  have  been  threatened  before  any  court or other
governmental  body or by any public authority to restrain,  enjoin,  or prohibit
the Holding  Company  Merger or the Bank Merger,  or


                                      A-5
<PAGE>


which would  reasonably be expected to restrict  materially the operation of the
business of the  Company or that of the Bank or the  exercise of any rights with
respect  thereto  or to  subject  either of the  parties  hereto or any of their
subsidiaries,  directors,  or  officers  to  any  liability,  fine,  forfeiture,
divestiture, or penalty on the ground that the transactions contemplated hereby,
the parties hereto, or their subsidiaries,  directors, or officers have breached
or  will  breach  any  applicable  law or  regulation  or have  otherwise  acted
improperly  in connection  with the  transactions  contemplated  hereby and with
respect to which the parties  hereto have been advised by counsel  that,  in the
opinion of such counsel,  such action,  suit, or proceeding  raises  substantial
questions of law or fact which could reasonably be decided materially  adversely
to either party hereto or its subsidiaries, directors, or officers.

         3.3.  Registration Statement.

                  (a) Effectiveness.  The registration  statement to be filed by
Zions Bancorp with the Securities and Exchange  Commission  (the "SEC") pursuant
to the  Securities  Act of 1933 (the  "Securities  Act") in connection  with the
registration of the shares of Zions Bancorp Stock to be used as consideration in
connection with the Holding Company Merger (the "Registration  Statement") shall
have become  effective under that Act, and Zions Bancorp shall have received all
required  state  securities  laws or  "blue  sky"  permits  and  other  required
authorizations   or   confirmations  of  the  availability  of  exemptions  from
registration  requirements necessary to issue Zions Bancorp Stock in the Holding
Company Merger.

                  (b) Absence of Stop-Order.  Neither the Registration Statement
nor any such required permit, authorization, or confirmation shall be subject to
a  stop-order  or  threatened  stop-order  by the  SEC or any  state  securities
authority.

         3.4. Federal Income Taxation.  Zions Bancorp and the Company shall have
received a written opinion of Duane,  Morris & Heckscher LLP, or of another firm
mutually agreeable to Zions Bancorp and the Company, applying existing law, that
the  Holding  Company  Merger and the Bank Merger  shall  qualify as one or more
reorganizations  under  section  368(a)(1) of the Code and the  regulations  and
rulings promulgated thereunder.  In rendering such opinion,  counsel may require
and rely upon  representations  contained in  certificates  of officers of Zions
Bancorp, the Company, and others.

         3.5. Adverse  Legislation.  Subsequent to the date of this Agreement no
legislation  shall have been  enacted and no  regulation  or other  governmental
requirement  shall  have been  adopted or imposed  that  renders or will  render
consummation of any of the material transactions  contemplated by this Agreement
impossible.


                                      A-6


<PAGE>


4.    CONDITIONS  PRECEDENT TO PERFORMANCE OF THE  OBLIGATIONS OF ZIONS BANCORP,
      VAL COR, AND BCNA.

      The obligations of Zions Bancorp,  Val Cor, and BCNA hereunder are subject
to the  satisfaction,  on or prior to the  Effective  Date, of all the following
conditions,  compliance  with which or the  occurrence of which may be waived in
whole or in part by Zions Bancorp in writing unless not so permitted by law:

      4.1.  Approval by  Shareholders  of the Company.  The  shareholders of the
Company, acting pursuant to a proxy statement in form and substance satisfactory
to Zions Bancorp and its counsel, shall have authorized, ratified, and confirmed
the Holding  Company  Merger by not less than the  requisite  percentage  of the
outstanding  voting stock of each class of the Company,  in accordance  with the
applicable laws of the State of Colorado.

      4.2.  Representations  and  Warranties;  Performance of  Obligations.  All
representations  and  warranties  of the Company and the Bank  contained in this
Agreement shall be true and correct in all material respects as of the Effective
Date with the same effect as if such  representations  and  warranties  had been
made or given at and as of such date, except that representations and warranties
of the Company or the Bank contained in this Agreement which specifically relate
to an earlier date shall be true and correct in all material respects as of such
earlier  date.  All  covenants  and  obligations  to be  performed or met by the
Company  or the  Bank on or prior  to the  Effective  Date  shall  have  been so
performed or met. On the  Effective  Date,  the  president  and chief  executive
officer  and the chief  financial  officer of each of the  Company  and the Bank
shall  deliver to Zions Bancorp a  certificate  to that effect.  The delivery of
such  certificates  shall in no way  diminish the  warranties,  representations,
covenants, and obligations of the Company and the Bank made in this Agreement.

      4.3.  Opinion of  Company  Counsel.  Zions  Bancorp  shall  have  received
favorable opinions from Hendricks, Hendricks & Shakes, P.C. and Beltz, Edwards &
Sabo, LLP, each dated the Effective Date, substantially in form and substance as
set forth as Exhibit IV and Exhibit V attached hereto, respectively.

      4.4.  Opinion of Company  Litigation  Counsel.  Zions  Bancorp  shall have
received a favorable opinion from legal counsel handling  litigation matters for
the Company and the Bank,  dated the Effective Date,  substantially  in form and
substance as that set forth as Exhibit VI attached hereto.

     4.5. Delivery of Branch Authorizations. The Company shall have delivered to
Zions  Bancorp   originals  or  certified   copies  of  all  of  the  regulatory
authorizations  entitling  the  Bank  to  operate  each of its  branch  offices,
together with a certification  by the president and chief executive  officer and
the chief financial officer of the Bank dated the Effective Date,


                                      A-7
<PAGE>


certifying that such branch  certificates have not been revoked or threatened to
be revoked and that such certificates are in full force and effect.

     4.6. No Adverse Developments.

               (a) During the period from  December  31,  1997 to the  Effective
Date, (i) there shall not have been any material adverse change in the financial
position or results of  operations  of the Company or the Bank taken as a whole,
nor shall the Company or the Bank have  sustained any material loss or damage to
its properties,  whether or not insured, which materially affects its ability to
conduct  its  business;  and (ii) none of the events  described  in clauses  (a)
through (f) of Section 6.16 of this Agreement  shall have occurred,  and each of
the  practices  and  conditions  described  in clauses  (x)  through (z) of that
section shall have been maintained.

               (b)  As of the  Effective  Date,  the  capital  structure  of the
Company and the capital structure of the Bank shall be as stated in section 6.9.

               (c) As of the Effective Date, other than liabilities  incurred in
the ordinary course of business  subsequent to December 31, 1997, there shall be
no liabilities of the Company or the Bank which are material to the Company on a
consolidated  basis which were not  reflected on the  consolidated  statement of
condition of the Company as of December 31, 1997 or in the related  notes to the
consolidated statement of condition of the Company as of December 31, 1997.

               (d) No adverse action shall have been instituted or threatened by
any governmental  authority,  or referred by a governmental authority to another
governmental  authority,  for the enforcement or assessment of penalties for the
violation of any laws of regulations relating to equal credit opportunity,  fair
housing, or fair lending.

               (e) Zions Bancorp  shall have  received a  certificate  dated the
Effective Date,  signed by the president and the chief financial  officer of the
Company  and  the  president  and  the  chief  financial  officer  of the  Bank,
certifying to the matters set forth in paragraphs (a), (b), (c), and (d) of this
section 4.6. The delivery of such officers' certificate shall in no way diminish
the warranties and  representations  of the Company or those of the Bank made in
this Agreement.

     4.7.  Consolidated  Net  Worth.  On  and  as of  the  Effective  Date,  the
consolidated net worth of the Company as determined in accordance with generally
accepted accounting  principles shall not be less than the sum of (a) $7,701,639
and  (b)  the  aggregate   contributions  to  capital  caused  by  the  payments
accompanying the exercise of any stock options on or after December 31, 1997.

                                      A-8

<PAGE>


     4.8. Loan Loss  Reserve.  On and as of the  Effective  Date,  the aggregate
reserve for loan losses of the Bank as determined in accordance  with  generally
accepted accounting principles shall not be less than $670,028.

     4.9.  CRA  Rating.  The CRA  rating  of the Bank  shall  be no  lower  than
"satisfactory."

     4.10.  Employment  Agreements.  Each of James P. Oaks and  Charles  A. Oaks
shall have entered into an employment  agreement with BCNA substantially in form
and substance as that set forth as Exhibit VII attached hereto.

     4.11. Accounting  Treatment.  Unless repurchases by Zions Bancorp of shares
of its common stock shall have made the receipt of such  letters  impracticable,
(a) Zions Bancorp  shall have  received  letters from KPMG Peat Marwick LLP, its
independent  auditing  firm,  dated the date of or shortly  prior to each of the
mailing date of the proxy materials to the shareholders of the Company,  and the
Effective Date, stating its opinion that the reorganization contemplated by this
Agreement shall qualify for pooling-of-interest accounting treatment and (b) the
president and chief executive officer,  and chief financial officer,  of each of
the Company and the Bank shall have  delivered  to Zions  Bancorp a  certificate
substantially  in form and  substance as that set forth as Exhibit VIII attached
hereto.

     4.12.  Directors  Examination.  The  Directors  Examination  of the Bank by
William-Thomas Associates as of December 31, 1997 shall have been completed, and
no material adverse change to the financial condition of the Company or the Bank
shall have been  revealed,  nor shall any material  adjustments to the financial
accounts of the Company or the Bank have been recorded, as a result thereof.

     4.13.  Affiliates'  Agreements.  Zions Bancorp shall, not later than thirty
days prior to the Effective  Date,  have received a written  agreement from each
"affiliate"  of the  Company  (as  that  term  is used  in  section  7.7 of this
Agreement)  reasonably  acceptable to Zions and  consistent  with section 7.7 of
this Agreement.

     4.14.  Non-Competition  Agreement.  Dale Duncan  shall have  entered into a
non-competition agreement with BCNA, substantially in form and substance as that
set forth as Exhibit IX hereto.

     4.15. Extension of Data Processing Contract.  The contract between the Bank
and its data processing  service provider shall have been amended to provide for
the  continuation  of data  processing  services to the Bank for a period of not
less than six months after the Effective Date, at a cost  reasonably  acceptable
to Zions Bancorp.


                                      A-9

<PAGE>



     4.16.  Mountain  National  Bank Service  Company.  Mountain  National  Bank
Service  Company  ("Service  Company")  will  have been  dissolved  prior to the
Effective Date without material financial consequence to the Company.


5.   CONDITIONS  PRECEDENT TO  PERFORMANCE OF OBLIGATIONS OF THE COMPANY AND THE
     BANK.

     The  obligations  of the Company and the Bank  hereunder are subject to the
satisfaction,  on  or  prior  to  the  Effective  Date,  of  all  the  following
conditions,  compliance  with which or the  occurrence of which may be waived in
whole or in part by the Company in writing unless not so permitted by law:

     5.1.  Representations  and  Warranties;  Performance  of  Obligations.  All
representations and warranties of Zions Bancorp,  Val Cor, and BCNA contained in
this  Agreement  shall be true and  correct in all  material  respects as of the
Effective  Date with the same effect as if such  representations  and warranties
had been made or given at and as of such date, except that  representations  and
warranties of Zions Bancorp, Val Cor, and BCNA contained in this Agreement which
specifically relate to an earlier date shall be true and correct in all material
respects as of such earlier date. All covenants and  obligations to be performed
or met by Zions  Bancorp,  Val Cor,  or BCNA on or prior to the  Effective  Date
shall have been so performed or met. On the Effective Date, either the President
or an Executive  Vice  President of Zions Bancorp and either the  Chairman,  the
President  or an  Executive  Vice  President  of each of Val Cor and BCNA  shall
deliver to the  Company a  certificate  to that  effect.  The  delivery  of such
officer's certificate shall in no way diminish the warranties,  representations,
covenants,  and  obligations  of Zions  Bancorp,  Val Cor, and BCNA made in this
Agreement.

     5.2.  Opinion of Zions Bancorp  Counsel.  The Company shall have received a
favorable  opinion of Duane,  Morris & Heckscher LLP, dated the Effective  Date,
substantially  in form and  substance  as that set forth as  Exhibit X  attached
hereto.

     5.3. No Adverse  Developments.  During the period from December 31, 1997 to
the Effective Date, there shall not have been any material adverse change in the
financial   position  or  results  of   operations  of  Zions  Bancorp  and  its
subsidiaries,  taken as a whole,  nor shall Zions Bancorp and its  subsidiaries,
taken  as a  whole,  have  sustained  any  material  loss  or  damage  to  their
properties,  whether or not insured,  which materially  affects their ability to
conduct their business;  and the Company shall have received a certificate dated
the  Effective  Date  signed by either  the  President  of Zions  Bancorp  or an
Executive Vice President of Zions Bancorp to the foregoing effect.  The delivery
of such  officer's  certificate  shall in no way  diminish  the  warranties  and
representations of Zions Bancorp made in this Agreement.


                                      A-10

<PAGE>


     5.4. Status of Zions Bancorp Stock.  Zions Bancorp Stock shall be listed on
the Nasdaq  National  Market (or else shall  become  listed on another  national
securities exchange).


6.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE BANK.

     The Company (with respect to the Company and the Bank) and the Bank (solely
with respect to itself) each  represent and warrant to Zions  Bancorp,  Val Cor,
and BCNA as follows:

     6.1. Organization,  Powers, and Qualification.  Each of the Company and the
Bank is a corporation  which is duly organized,  validly  existing,  and in good
standing  under  the  laws  of its  jurisdiction  of  incorporation  and has all
requisite  corporate  power and authority to own and operate its  properties and
assets,  to lease properties used in its business,  and to carry on its business
as now  conducted.  Each of the  Company and the Bank owns or  possesses  in the
operation  of  its   business  all   franchises,   licenses,   permits,   branch
certificates,   consents,   approvals,   waivers,   and  other   authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now  conducted,  except  for  those  where  the  failure  of such  ownership  or
possession  would not  adversely  affect the  operation  and  properties  of the
Company or the Bank in any material respect. Each of the Company and the Bank is
duly  qualified  and  licensed to do business  and is in good  standing in every
jurisdiction  with  respect to which the failure to be so  qualified or licensed
could  result in  material  liability  or  adversely  affect the  operation  and
properties of the Company or the Bank in any material respect.

     6.2.  Execution and  Performance of Agreement.  Each of the Company and the
Bank has all requisite corporate power and authority to execute and deliver this
Agreement and to perform its respective terms.

     6.3. Absence of Violations. Except as set forth on Schedule 6.3 hereof:

          (a) neither the Company nor the Bank is in violation of its respective
charter documents or bylaws, nor of any applicable federal,  state, or local law
or ordinance nor any order, rule, or regulation of any federal, state, local, or
other governmental  agency or body, in any material respect,  or in default with
respect to any order,  writ,  injunction,  or decree of any court, or in default
under any order, license,  regulation, or demand of any governmental agency, any
of  which  violations  or  defaults  could  reasonably  be  expected  to  have a
materially adverse effect on its business,  properties,  liabilities,  financial
position,  results of operations,  or prospects; and neither the Company nor the
Bank has received any claim or notice of violation with respect thereto;


                                      A-11


<PAGE>

          (b) neither the Company nor the Bank nor any member of the  management
of either of them is a party to any assistance agreement, supervisory agreement,
memorandum of understanding,  consent order, cease and desist order or condition
of any regulatory order or decree with or by the Board of Governors, the Federal
Reserve Bank of Kansas City, the OCC, the Federal Deposit Insurance  Corporation
(the "FDIC"),  any other banking or securities authority of the United States or
the State of  Colorado,  or any other  regulatory  agency  that  relates  to the
conduct of the business of the Company or the Bank or their  assets;  and except
as  previously  disclosed  to  Zions  Bancorp  in  writing,  no such  agreement,
memorandum, order, condition, or decree is pending or threatened;

          (c) each of the  Company  and the Bank has  established  policies  and
procedures  to provide  reasonable  assurance of  compliance in a safe and sound
manner with the federal banking, credit, housing, consumer protection, and civil
rights laws and with all other laws  applicable to the operations of the Company
and the Bank and the  regulations  adopted  under  each of those  laws,  so that
transactions  be executed and assets be maintained in accordance  with such laws
and  regulations;  and the policies and practices of each of the Company and the
Bank  with  respect  to  all  such  laws  and   regulations   reasonably   limit
noncompliance and detect and report noncompliance to its management; and

          (d) the Bank has established a CRA policy which provides for (i) goals
and objectives  consistent with CRA; (ii) a methodology for  self-assessment  by
the board of directors of the Bank;  (iii) ongoing CRA training of all personnel
of the  Bank,  including  the  members  of its  board  of  directors;  and  (iv)
procedures whereby all significant  CRA-related activity is documented;  and the
Bank has officially  designated a CRA officer who reports  directly to the board
of directors and is responsible for the CRA program of the Bank.

     6.4.  Compliance  with  Agreements.  Neither the Company nor the Bank is in
violation of any material  term of any material  security  agreement,  mortgage,
indenture, or any other contract, agreement,  instrument, lease, or certificate.
The capital  ratios of each of the  Company  and the Bank comply  fully with all
terms of all currently outstanding  supervisory and regulatory  requirements and
with the conditions of all regulatory orders and decrees.

     6.5. Binding Obligations; Due Authorization. Subject to the approval of its
shareholders,  this Agreement  constitutes valid, legal, and binding obligations
of each of the Company and the Bank,  enforceable  against it in accordance with
its  terms,  except as  enforcement  may be limited  by  applicable  bankruptcy,
insolvency,  moratorium or similar law, or by general  principles of equity. The
execution,  delivery,  and  performance of this  Agreement and the  transactions
contemplated  thereby  have been  duly and  validly  authorized  by the board of
directors  of each of the  Company  and the Bank.  Subject  to  approval  by its
shareholders  of this Agreement,  no other corporate  proceedings on the part of
either the Company or the Bank are necessary to authorize  this Agreement or the
carrying out of the transactions contemplated hereby.


                                      A-12


<PAGE>


     6.6.  Absence of Default.  None of the  execution  or the  delivery of this
Agreement,  the consummation of the transactions  contemplated  thereby,  or the
compliance  with or  fulfillment  of the terms  thereof will  conflict  with, or
result  in a breach  of any of the  terms,  conditions,  or  provisions  of,  or
constitute a default under the organizational documents or bylaws of the Company
or the Bank. Such execution,  consummation, or fulfillment will not (a) conflict
with, or result in a material breach of the terms, conditions, or provisions of,
or constitute a material  violation,  conflict,  or default under, or, except as
set  forth on  Schedule  6.6  hereof,  give  rise to any  right of  termination,
cancellation,  or acceleration with respect to, or result in the creation of any
lien,  charge, or encumbrance upon, any property or assets of the Company or the
Bank pursuant to any material agreement or instrument under which the Company or
the Bank is obligated or by which any of its  properties or assets may be bound,
including without limitation any material lease, contract, mortgage,  promissory
note,  deed  of  trust,  loan,  credit  arrangement,   or  other  commitment  or
arrangement of the Company or the Bank in respect of which it is an obligor; (b)
if the Holding  Company  Merger is approved by the Board of Governors  under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), or if the Board of
Governors  waives its jurisdiction  over the Holding Company Merger,  and if the
Bank Merger is approved by the OCC,  the  Commissioner,  and the Banking  Board,
violate any law,  statute,  rule, or  regulation of any  government or agency to
which  the  Company  or the  Bank  is  subject  and  which  is  material  to its
operations;  or (c) violate any judgment,  order, writ,  injunction,  decree, or
ruling to which the  Company or the Bank or any of its  properties  or assets is
subject or bound.  None of the  execution  or  delivery of this  Agreement,  the
consummation of the transactions contemplated thereby, or the compliance with or
fulfillment  of the terms  thereof  will  require  any  authorization,  consent,
approval,  or exemption by any person which has not been obtained, or any notice
or filing which has not been given or done,  other than approval of or waiver of
jurisdiction  over the transactions  contemplated by this Agreement by the Board
of Governors, the OCC, the Commissioner, and the Banking Board.

     6.7. Compliance with BHC Act.

          (a) The Company is registered as a bank holding  company under the BHC
Act.  All of the  activities  and  investments  of the  Company  conform  to the
requirements  applicable  generally to bank holding  companies under the BHC Act
and the regulations of the Board of Governors adopted thereunder.

          (b) No  corporation  or  other  entity,  other  than the  Company,  is
registered or is required to be  registered as a bank holding  company under the
BHC Act by virtue of its control over the Bank or over any company that directly
or indirectly has control over the Bank.


                                      A-13



<PAGE>


     6.8. Subsidiaries.

          (a)  Other  than  the  Bank and  Service  Company,  each of which is a
direct,  wholly-owned  subsidiary of the Company,  the Company does not have any
direct  or  indirect  subsidiaries  and does not  directly  or  indirectly  own,
control,  or hold with the power to vote any shares of the capital  stock of any
company (except shares held by the Bank for the account of others in a fiduciary
or custodial  capacity in the  ordinary  course of its  business).  There are no
outstanding  subscriptions,  options, warrants,  convertible securities,  calls,
commitments,  or agreements  calling for or requiring  the  issuance,  transfer,
sale,  or other  disposition  of any shares of the capital stock of the Bank, or
calling for or requiring the issuance of any  securities  or rights  convertible
into or exchangeable for shares of capital stock of the Bank. There are no other
direct  or  indirect  subsidiaries  of the  Company  which  are  required  to be
consolidated or accounted for on the equity method in the consolidated financial
statements  of the Company or the  financial  statements of the Bank prepared in
accordance  with  generally  accepted  accounting  principles.  Service  Company
conducts no business operations.

          (b)  Except as  specified  in the  previous  subsection,  neither  the
Company nor the Bank has a direct or indirect equity or ownership interest which
represents 5 percent or more of the  aggregate  equity or ownership  interest of
any entity (including, without limitation, corporations, partnerships, and joint
ventures).

     6.9. Capital Structure.

          (a) The authorized capital stock of the Company consists of (i) 50,000
shares of Company  Common  Stock,  of which,  as of the date of this  Agreement,
50,000 shares have been duly issued and are validly outstanding, fully paid, and
held by approximately  sixteen shareholders of record. The aforementioned shares
of  Company  Common  Stock  are  the  only  voting  securities  of  the  Company
authorized,  issued,  or outstanding as of such date; and except as set forth on
Schedule 6.9 hereof, no subscriptions,  warrants,  options, rights,  convertible
securities,  or similar  arrangements or commitments in respect of securities of
the Company are authorized, issued, or outstanding which would enable the holder
thereof to purchase or otherwise acquire shares of any class of capital stock of
the  Company.  No shares of  Company  Common  Stock are held by the  Company  as
treasury shares. None of the Company Common Stock is subject to any restrictions
upon the transfer thereof under the terms of the corporate  charter or bylaws of
the Company.

          (b)  Schedule  6.9  hereof  lists  all  options  to  purchase  Company
securities  currently  outstanding  and,  for  each  such  option,  the  date of
issuance,  date of  exercisability,  exercise price,  type of security for which
exercisable,  and date of  expiration.  Schedule  6.9 hereof  further  lists all
shares of Company  Common Stock  reserved for issuance  pursuant to stock option
plans, agreements, or arrangements but not yet issued and all options upon


                                      A-14


<PAGE>


shares of Company  Common Stock  designated or made  available for grant but not
yet granted.

          (c) The authorized capital stock of the Bank consists of 50,000 shares
of common stock, $20.00 par value (the "Bank Common Stock"), of which, as of the
date of this  Agreement,  50,000  shares  have been duly  issued and are validly
outstanding, fully paid, and all of which are held of record and beneficially by
the Company. The aforementioned  shares of Bank Common Stock are the only voting
securities of the Bank authorized,  issued,  or outstanding as of such date; and
no subscriptions,  warrants, options, rights, convertible securities, or similar
arrangements or commitments in respect of securities of the Bank are authorized,
issued,  or  outstanding  which would  enable the holder  thereof to purchase or
otherwise  acquire shares of any class of capital stock of the Bank. None of the
Bank Common Stock is subject to any restrictions upon the transfer thereof under
the terms of the corporate charter or bylaws of the Bank.

          (d) None of the shares of Company  Common  Stock or Bank Common  Stock
has been issued in violation of the preemptive rights of any shareholder.

          (e) As of the date hereof, to the best of the knowledge of the Company
and  the  Bank,  and  except  for  this  Agreement,  there  are  no  shareholder
agreements, or other agreements,  understandings, or commitments relating to the
right of any holder or beneficial owner of more than 1 percent of the issued and
outstanding  shares of any class of the  capital  stock of either the Company or
the Bank to vote or to dispose  of his or its  shares of  capital  stock of that
entity.

          (f) The Company has not  granted any  shareholders'  rights to dissent
from any merger.

     6.10.  Articles of Incorporation,  Bylaws,  and Minute Books. The copies of
the articles of incorporation  and all amendments  thereto and of the bylaws, as
amended,  of the Company and the Bank that have been  provided to Zions  Bancorp
and certified by the Company as complete and true copies are true, correct,  and
complete copies thereof. The minute books of the Company and the Bank which have
been made  available to Zions Bancorp for its  continuing  inspection  until the
Effective Date contain accurate minutes of all meetings and accurate consents in
lieu of meetings of the board of directors  (and any  committee  thereof) and of
the shareholders of the Company and the Bank since their respective  inceptions.
These  minute  books  accurately  reflect all  transactions  referred to in such
minutes and consents in lieu of meetings  and  disclose  all material  corporate
actions of the  shareholders and boards of directors of the Company and the Bank
and all committees thereof.  Except as reflected in such minute books, there are
no minutes of meetings or consents in lieu of meetings of the board of directors
(or any committee thereof) or of shareholders of the Company or the Bank.


                                      A-15

<PAGE>


     6.11.  Books and Records.  The books and records of each of the Company and
the Bank fairly reflect the  transactions to which it is a party or by which its
properties are subject or bound.  Such books and records have been properly kept
and  maintained  and  are  in  compliance  in all  material  respects  with  all
applicable legal and accounting  requirements.  Each of the Company and the Bank
follows generally accepted  accounting  principles applied on a consistent basis
in the  preparation  and  maintenance  of its  books of  account  and  financial
statements,  including but not limited to the  application of the accrual method
of accounting for interest income on loans, leases,  discounts, and investments,
interest expense on deposits and all other  liabilities,  and all other items of
income and  expense.  The Company and the Bank have made all accruals in amounts
which fairly report income and expense in the proper periods in accordance  with
generally accepted accounting  principles.  Each of the Company and the Bank has
filed all material  reports and returns  required by any law or regulation to be
filed by it.

     6.12. Regulatory Approvals and Filings,  Contracts,  Commitments,  etc. The
Company has made or will, no later than ten business days after the date hereof,
make  available to Zions  Bancorp or grant to Zions  Bancorp  continuing  access
until the  Effective  Date to  originals  or copies of the  following  documents
relating to the Company and the Bank:

          (a) All  regulatory  approvals  received since January 1, 1992, of the
Company  and the  Bank  relating  to all bank and  nonbank  acquisitions  or the
establishment of de novo operations;

          (b) All employment contracts, election contracts, retention contracts,
deferred  compensation,  non-competition,  bonus, stock option,  profit-sharing,
pension,  retirement,   consultation  after  retirement,   incentive,  insurance
arrangements  or  plans  (including  medical,  disability,  group  life or other
insurance  plans),  and any other  remuneration  or fringe benefit  arrangements
applicable  to  employees,  officers,  or  directors of the Company or the Bank,
accompanied  by any  agreements,  including  trust  agreements,  embodying  such
contracts,  plans,  or  arrangements,  and all  employee  manuals and  memoranda
relating  to  employment  and  benefit  policies  and  practices  of any  nature
whatsoever  (whether or not  distributed  to employees or any of them),  and any
actuarial reports and audits relating to such plans;

          (c)  All  material  contracts,   agreements,  leases,  mortgages,  and
commitments,  except those entered into in the ordinary  course of business,  to
which the Company or the Bank is a party or may be bound; or, if any of the same
be oral,  true,  accurate,  and  complete  written  summaries  of all such  oral
contracts, agreements, leases, mortgages, and commitments;

          (d)  All  material  contracts,   agreements,  leases,  mortgages,  and
commitments,  whether or not entered into in the ordinary course of business, to
which the


                                      A-16

<PAGE>


Company or the Bank is a party or may be bound and which  require the consent or
approval of third parties to the execution and delivery of this  Agreement or to
the consummation or performance of any of the transactions contemplated thereby,
or, if any of the same be oral, true,  accurate,  and complete written summaries
of all such oral contracts, agreements, leases, mortgages, and commitments;

          (e)  All  deeds,  leases,   contracts,   agreements,   mortgages,  and
commitments,  whether or not entered into in the ordinary course of business, to
which the  Company  or the Bank is a party or may be bound  and which  relate to
land,  buildings,  fixtures,  or other real  property  upon or within  which the
Company or the Bank  operates its  businesses  or is  authorized  to operate its
businesses, or with respect to which the Company or the Bank has any application
pending for authorization to operate its businesses;

          (f) Any pending  application,  including  any  documents  or materials
related  thereto,  which  has been  filed by the  Company  or the Bank  with any
federal or state  regulatory  agency with respect to the  establishment of a new
office  or the  acquisition  or  establishment  of  any  additional  banking  or
nonbanking subsidiary; and

          (g) All federal,  state, and local tax returns,  including any amended
returns,  filed by the Company or the Bank for the years 1991  through  1997,  a
copy of the most recent audit examination of each of the Company and the Bank by
the Internal Revenue Service ("IRS"),  and a copy of all correspondence or other
documents with respect to any examination that has not yet been resolved, a copy
of the most recent state or local tax agency examination, if any, of each of the
Company and the Bank, and a copy of all  correspondence  or other documents with
respect to any examination that has not yet been resolved,  and all tax rulings,
closing agreements,  settlement agreements, or similar documents with respect to
the Company or the Bank  received from or entered into with the IRS or any other
taxing  authority  since  January 1, 1988 or that would have  continuing  effect
after the Effective Date.

     6.13. Financial Statements.  The Company has furnished to Zions Bancorp its
consolidated  statement of  condition as of each of December 31, 1995,  December
31,  1996,  and December 31,  1997,  and its related  consolidated  statement of
income,   consolidated   statement  of  changes  in  financial   position,   and
consolidated  statement  of  changes  in  stockholders'  equity  for each of the
periods then ended, and the notes thereto (collectively,  the "Company Financial
Statements").  All of the Company  Financial  Statements,  including the related
notes,  (a) were  prepared in  accordance  with  generally  accepted  accounting
principles applied in all material respects,  and (b) are in accordance with the
books and  records of the  Company  and the Bank which have been  maintained  in
accordance with generally accepted accounting  principles or the requirements of
financial institution regulatory authorities, as the case may be, and (c) fairly
reflect the consolidated financial position of the Company as of such dates, and
the  consolidated  results of operations of the Company for the periods ended on
such  dates,  and  do  not  fail  to  disclose  any  material  extraordinary  or
out-of-period items, and (d)


                                      A-17

<PAGE>


reflect, in accordance with generally accepted accounting  principles applied in
all material respects, adequate provision for, or reserves against, the possible
loan losses of the Company as of such dates.


     6.14. Call Reports; Bank Holding Company Reports.

          (a) The Bank has made  available  to Zions  Bancorp  its  Consolidated
Reports  of  Condition  and  Consolidated  Reports  of Income  for the  calendar
quarters dated March 31, 1995 and thereafter.  All of such Consolidated  Reports
of Condition and Consolidated Reports of Income, including the related schedules
and  memorandum  items,  were prepared in  accordance  with  generally  accepted
accounting  principles  applied  in all  material  respects  or,  to the  extent
different from generally accepted accounting  principles,  accounting principles
mandated  by  the  applicable  instructions  to  such  Consolidated  Reports  of
Condition or Consolidated Reports of Income.

          (b) No  adjustments  are  required  to be made to the  equity  capital
account of the Bank as reported on any of the Consolidated  Reports of Condition
referred to in Subsection  6.14(a) hereof,  in any material amount,  in order to
conform such equity capital  account to equity capital as would be determined in
accordance with generally accepted accounting principles as of such date.

          (c) The Company has  furnished to Zions  Bancorp (i) its annual report
on Form FR Y-6 as filed with the Board of Governors as of December 31, 1997, and
(ii) its semiannual report on Form FR Y-9SP as filed with the Board of Governors
as of December 31, 1997.

     6.15. Absence of Undisclosed Liabilities. At December 31, 1997, neither the
Company nor the Bank had any  obligation  or  liability  of any nature  (whether
absolute,  accrued,  contingent, or otherwise, and whether due or to become due)
which was  material,  or which when  combined  with all similar  obligations  or
liabilities would have been material, to the Company, except (a) as disclosed in
the Company Financial  Statements,  or (b) as set forth on Schedule 6.15 hereof,
or (c) for  unfunded  loan  commitments  made by the  Company or the Bank in the
ordinary course of their business consistent with past practice. The amounts set
up as current  liabilities  for taxes in the Company  Financial  Statements  are
sufficient for the payment of all taxes (including, without limitation, federal,
state, local, and foreign excise, franchise,  property, payroll, income, capital
stock, and sales and use taxes and any interest,  penalties, or additions to tax
with respect  thereto ("Tax" or "Taxes"))  accrued in accordance  with generally
accepted  accounting  principles and unpaid at December 31, 1997. Since December
31, 1997,  neither the Company nor the Bank has incurred or paid any  obligation
or liability  that would be material (on a  consolidated  basis) to the Company,
except (x) for obligations  incurred or paid in connection with  transactions by
it in the ordinary course of its


                                  A-18


<PAGE>



business  consistent with past  practices,  or (y) as set forth on Schedule 6.15
hereof, or (z) as expressly contemplated herein.


     6.16. Absence of Certain  Developments.  Since December 31, 1997, except as
set forth on Schedule 6.16 hereof, there has been (a) no material adverse change
in  the  condition,  financial  or  otherwise,  or to  the  assets,  properties,
liabilities,  or  businesses  of the  Company  and  the  Bank,  (b) no  material
deterioration in the quality of the consolidated  loan portfolio of the Company,
and no material  increase in the consolidated  level of nonperforming  assets or
non-accrual  loans at the Company or in the level of its consolidated  provision
for credit losses or its consolidated reserve for possible credit losses; (c) no
declaration, setting aside, or payment by the Company or the Bank of any regular
dividend,  special dividend,  or other distribution with respect to any class of
capital stock of the Company or the Bank,  other than  customary  cash dividends
paid by the Company or the Bank whose  amounts have not exceeded  past  practice
and the intervals  between which dividends have not been more frequent than past
practice;  (d) no repurchase by the Company of any of its capital stock;  (e) no
material loss, destruction, or damage to any material property of the Company or
the Bank, which loss,  destruction,  or damage is not covered by insurance;  and
(f) no  material  acquisition  or  disposition  of any asset,  nor any  material
contract  outside the ordinary course of business entered into by the Company or
the Bank nor any substantial  amendment or termination of any material  contract
outside  the  ordinary  course of business to which the Company or the Bank is a
party, nor any other  transaction by the Company or the Bank involving an amount
in excess of $25,000  other than for fair  value in the  ordinary  course of its
business.  Since December 31, 1997, except as set forth on Schedule 6.16 hereof,
(x) each of the  Company and the Bank has  conducted  its  business  only in the
ordinary  course of such business and  consistent  with past  practice;  (y) the
Company,  on a  consolidated  basis,  has  maintained  the  quality  of its loan
portfolio  and that of each of its major  components at  approximately  the same
level as existed at December 31, 1997;  and (z) the Company,  on a  consolidated
basis,  has administered  its investment  portfolio  pursuant to essentially the
same policies and  procedures as existed  during 1996 and 1997, and has taken no
action to lengthen the average maturity of the investment  portfolio,  or of any
significant category thereof, to any material extent.

     6.17.  Reserve for  Possible  Credit  Losses.  The  Company's  consolidated
reserve for possible credit losses is adequate to absorb reasonably  anticipated
losses in the consolidated loan and lease portfolios of the Company,  in view of
the size and character of such  portfolios,  current  economic  conditions,  and
other pertinent  factors.  Management  periodically  reevaluates the adequacy of
such reserve based on portfolio  performance,  current economic conditions,  and
other factors.


                                      A-19


<PAGE>


     6.18. Tax Matters.

          (a) Except as set forth on Schedule  6.18 hereof,  all Tax returns and
reports  required  to be filed by or on behalf of the  Company  or the Bank have
been  timely   filed  with  the   appropriate   governmental   agencies  in  all
jurisdictions  in which such  returns and reports are  required to be filed,  or
requests for extensions  have been timely filed,  granted,  and have not expired
for periods  ending on or before  December 31, 1996,  and all returns  filed are
complete and accurate  and  properly  reflect its Taxes for the periods  covered
thereby.  All Taxes  shown or required  to be shown on filed  returns  have been
paid.  As of the date  hereof,  there is no audit  examination,  deficiency,  or
refund  litigation  or tax  claim  or  any  notice  of  assessment  or  proposed
assessment  by the IRS or any other  taxing  authority,  or any other  matter in
controversy  with  respect  to any Taxes that  might  result in a  determination
adverse to the Company or the Bank,  except as  reserved  against in the Company
Financial  Statements.  All Taxes due with  respect  to  completed  and  settled
examinations or concluded litigation have been properly accrued or paid.

          (b)  Neither the Company  nor the Bank has  executed an  extension  or
waiver of any statute of  limitations on the assessment or collection of any Tax
due that is currently in effect.

          (c) To the extent  any Taxes are due from,  but have not yet been paid
by, the Company or the Bank for the period or periods  beginning January 1, 1997
or thereafter through and including the Effective Date, adequate provision on an
estimated basis has been made for the payment of such taxes by  establishment of
appropriate tax liability  accounts on the monthly  financial  statements of the
Company.

          (d) Except as set forth on Schedule 6.18 hereof, deferred Taxes of the
Company  and the Bank  have  been  provided  for in  accordance  with  generally
accepted accounting principles as in effect on the date of this Agreement.

          (e) The  deductions of the Bank for bad debts taken and the reserve of
the Bank for loan losses for federal  income tax  purposes at December 31, 1996,
were not greater  than the maximum  amount  permitted  under the  provisions  of
section 585 of the Code.

          (f) Other than liens  arising  under the laws of the State of Colorado
with respect to taxes  assessed  and not yet due and  payable,  there are no tax
liens on any of the properties or assets of the Company or the Bank.

          (g) The  Company and the Bank (A) have  timely  filed all  information
returns or reports required to be filed with respect to Taxes, including but not
limited to those required by sections 6041, 6041A,  6042, 6045, 6049, 6050H, and
6050J of the Code, (B) have properly and timely  provided to all persons,  other
than taxing authorities, all


                                      A-20


<PAGE>


information reports or other documents (for example,  Form 1099s, Form W-2s, and
so forth) required to be provided to such persons under  applicable law, and (C)
have  exercised due  diligence in obtaining  certified  taxpayer  identification
numbers as required under applicable law.

          (h) The  taxable  year  end of the  Company  for  federal  income  tax
purposes  is, and since the  inception  of the  Company has  continuously  been,
December 31.

          (i) The Company and the Bank have in all material  respects  satisfied
all federal,  state, local, and foreign  withholding tax requirements  including
but not limited to income, social security, and employment tax withholding.

          (j) Neither the Company nor the Bank (A) is, or has been,  a member of
a group filing a  consolidated,  combined,  or unitary tax return,  other than a
group the common parent of which is or was the Company, or (B) has any liability
for the Taxes of any person  (other than the Company and the Bank) under  Treas.
Reg. Sec. 1.1502-6 (or any similar  provision of state,  local, or foreign law),
as a transferee or successor, by contract, or otherwise.

     6.19.  Consolidated Net Worth. The consolidated net worth of the Company on
the date of this Agreement,  as determined in accordance with generally accepted
accounting principles, is not less than $7,701,639.

     6.20.  Examinations.  To the extent  consistent  with law,  the Company has
heretofore disclosed to Zions Bancorp relevant information contained in the most
recent safety-and-soundness,  compliance,  Community Reinvestment Act, and other
Reports  of  Examination  with  respect  to the  Company  issued by the Board of
Governors  and  the  most  recent  safety-and-soundness,  compliance,  Community
Reinvestment  Act,  and other  Reports of  Examination  with respect to the Bank
issued by each of the Banking Board and the Federal Reserve Bank of Kansas City.
Such information so disclosed consists of all material  information with respect
to  the  financial,  operational,  and  legal  condition  of  the  entity  under
examination  which is  included in such  reports,  and does not omit or will not
omit any information necessary to make the information disclosed not misleading.

     6.21. Reports.  Since January 1, 1995, each of the Company and the Bank has
effected all registrations  and filed all reports and statements,  together with
any amendments  required to be made with respect thereto,  which it was required
to effect or file with (a) the Board of Governors,  (b) the Federal Reserve Bank
of Kansas City, (c) the OCC, (d) the FDIC,  (e) the United States  Department of
the Treasury,  (f) the Colorado Division of Banking,  (g) the Banking Board, and
(h) any other governmental or regulatory authority or agency having jurisdiction
over  its  operations.  Each  of such  registrations,  reports,  and  documents,
including the financial statements, exhibits, and schedules thereto, does not


                                      A-21

<PAGE>



contain any statement  which, at the time and in the light of the  circumstances
under which it was made,  is false or  misleading  with  respect to any material
fact or which omits to state any  material  fact  necessary in order to make the
statements contained therein not false or misleading.

     6.22. FIRA Compliance and Other Transactions with Affiliates. Except as set
forth  on  Schedule  6.22  hereof,  (a)  none  of the  officers,  directors,  or
beneficial  holders of 5 percent or more of the common  stock of the  Company or
the Bank and no person  "controlled"  (as that term is defined in the  Financial
Institutions Regulatory and Interest Rate Control Act of 1978) by the Company or
the Bank  (collectively,  "Insiders") has any ongoing material  transaction with
the  Company or the Bank on the date of this  Agreement;  (b) no Insider has any
ownership interest in any business, corporate or otherwise, which is a party to,
or  in  any  property  which  is  the  subject  of,  business   arrangements  or
relationships  of any kind  with  the  Company  or the Bank not in the  ordinary
course of business; and (c) all other extensions of credit by the Company or the
Bank to any Insider have  heretofore been disclosed in writing by the Company to
Zions Bancorp.

     6.23.  SEC  Registered  Securities.  No  equity or debt  securities  of the
Company  or the Bank are  registered  or  required  to be  registered  under the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

     6.24.  Legal  Proceedings.  Except as  disclosed  in the Company  Financial
Statements or as set forth on Schedule 6.24 hereof,  there is no claim,  action,
suit, arbitration,  investigation, or other proceeding pending before any court,
governmental  agency,  authority  or  commission,   arbitrator,   or  "impartial
mediator"  (of which the  Company or the Bank has been  served  with  process or
otherwise been given notice) or, to the best of the knowledge of the Company and
the Bank , threatened or  contemplated  against or affecting it or its property,
assets,  interests,  or rights,  or any basis  therefor of which notice has been
given,  which,  if adversely  determined,  would have a material  adverse effect
(financial  or  otherwise)  on the  business,  operating  results,  or financial
condition of the Company or which  otherwise  could  prevent,  hinder,  or delay
consummation of the transactions contemplated by this Agreement.

     6.25. Absence of Governmental Proceedings.  Except as set forth on Schedule
6.25 hereof, neither the Company nor the Bank is a party defendant or respondent
to  any  pending  legal,   equitable,  or  other  proceeding  commenced  by  any
governmental  agency  and, to the best of the  knowledge  of the Company and the
Bank, no such proceeding is threatened.

     6.26. Federal Deposit Insurance.  The deposits held by the Bank are insured
within  statutory  limits by the FDIC pursuant to the  provisions of the Federal
Deposit Insurance Act, as amended (12 U.S.C. section 1811 et seq.), and the Bank
has paid all assessments  and filed all related reports and statements  required
under the Federal Deposit Insurance Act.


                                      A-22

<PAGE>



     6.27. Other Insurance.  Each of the Company and the Bank carries  insurance
with reputable insurers, including blanket bond coverage, in such amounts as are
reasonable to cover such risks as are customary in relation to the character and
location of its properties and the nature of its  businesses.  All such policies
of insurance  are in full force and effect,  and no notice of  cancellation  has
been received.  All premiums to date have been paid in full. Neither the Company
nor the Bank is in default  with respect to any such policy which is material to
it.

     6.28.  Labor  Matters.  Neither  the  Company nor the Bank is a party to or
bound by any  collective  bargaining  contracts with respect to any employees of
the Company or the Bank. Since their  respective  inceptions there has not been,
nor to the best of the  knowledge  of the  Company  and the Bank was there or is
there threatened, any strike, slowdown, picketing, or work stoppage by any union
or other  group  of  employees  against  the  Company  or the Bank or any of its
premises, or any other labor trouble or other occurrence, event, or condition of
a similar character.  As of the date hereof, neither the Company nor the Bank is
aware of any attempts to organize a collective  bargaining unit to represent any
of its employee groups.

     6.29. Employee Benefit Plans.

          (a) Schedule 6.29 hereto contains a list or brief  descriptions of all
pension, retirement, stock purchase, stock bonus, stock ownership, stock option,
performance  share,  stock  appreciation  right,  phantom  stock,   savings,  or
profit-sharing plans, any employment, deferred compensation,  consultant, bonus,
or collective  bargaining  agreement,  or group insurance  contract or any other
incentive,   welfare,  life  insurance,  death  or  survivor's  benefit,  health
insurance, sickness, disability,  medical, surgical, hospital, severance, layoff
or vacation plans,  contracts,  and  arrangements  or employee  benefit plans or
agreements sponsored,  maintained,  or contributed to by the Company or the Bank
for the  employees or former  employees of the Company or the Bank.  The Company
has  previously  made  available  and will  continue to make  available to Zions
Bancorp for its continuing review until the Effective Date true,  complete,  and
accurate copies of all plans and arrangements  listed on Schedule 6.29, together
with (i) the most recent actuarial and financial report prepared with respect to
any such plans which  constitute  "qualified  plans" under section 401(a) of the
Code, and (ii) the most recent annual reports, if any, filed with any government
agency and all IRS rulings and  determination  letters and any open requests for
such rulings and letters that pertain to any such plan.

          (b) Except for liabilities to the Pension Benefit Guaranty Corporation
("PBGC") pursuant to section 4007 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), all of which have been fully paid, and except for
liabilities  to the IRS under  section 4971 of the Code,  all of which have been
fully paid,  neither the Company nor the Bank has any liability  with respect to
any pension plan qualified under


                                      A-23

<PAGE>


section 401 of the Code.  Neither the Company nor the Bank sponsors or maintains
any defined benefit plan or has ever sponsored or maintained any defined benefit
plan.

          (c) All "employee benefit plans," as defined in section 3(3) of ERISA,
that  cover one or more  employees  employed  by the  Company  or the Bank (each
individually  a "Plan" and  collectively  the  "Plans"),  comply in all material
respects with ERISA and,  where  applicable  for  tax-qualified  or  tax-favored
treatment,  with the Code. As of December 31, 1997,  neither the Company nor the
Bank had any  material  liability  under any Plan which is not  reflected on the
Company  Financial  Statements  as  of  such  date  (other  than  such  normally
unrecorded  liabilities  under  the Plans for sick  leave,  holiday,  education,
bonus, vacation,  incentive compensation,  and anniversary awards, provided that
such liabilities are not in any event material). None of the Plans, the Company,
the Bank,  nor any trustee or  administrator  of the Plans has ever engaged in a
"prohibited transaction" with respect to the Plans within the meaning of section
406 of ERISA  or,  where  applicable,  section  4975 of the  Code  for  which no
exemption is  applicable,  nor have there been any  "reportable  events"  within
section  4043 of ERISA for which the  thirty-day  notice  therefor  has not been
waived.  Neither the  Company  nor the Bank has  incurred  any  liability  under
section 4201 of ERISA for a complete or partial withdrawal from a multi-employer
plan.

          (d) No  action,  claim,  or  demand  of any kind has been  brought  or
threatened by any potential  claimant or representative of such a claimant under
any  plan,  contract,  or  arrangement  referred  to in  Subsection  (a) of this
section, where the Company or the Bank may be either (i) liable directly on such
action,  claim, or demand;  or (ii) obligated to indemnify any person,  group of
persons,  or entity with respect to such action,  claim,  or demand which is not
fully covered by insurance  maintained  with  reputable,  responsible  financial
insurers or by a self-insured plan.

          (e) All amounts for which the Bank may be liable  under the  Executive
Employee Salary  Continuation  Agreements between the Bank and James P. Oaks and
Charles A. Oaks have been fully  funded by  insurance  policies on their  lives,
copies of which have been  provided to Zions  Bancorp.  The Bank owns and is the
beneficiary  of, and after the Holding  Company  Merger BCNA will own and be the
beneficiary  of, such policies.  All premiums on such policies have been paid in
full.

     6.30.  Employee  Relations.  As of the date hereof, each of the Company and
the Bank  is,  to the  best of its  knowledge,  in  compliance  in all  material
respects  with all federal and state laws,  regulations,  and orders  respecting
employment and employment practices (including Title VII of the Civil Rights Act
of 1964),  terms and conditions of employment,  and wages and hours; and neither
the Company nor the Bank is engaged in any unfair labor practice. As of the date
hereof,  except as set forth on Schedule 6.30 hereof,  no dispute exists between
the Company or the Bank and any of its employee groups regarding any employee


                                      A-24


<PAGE>


organization,  wages,  hours, or conditions of employment which would materially
interfere with the business or operations of the Company or the Bank.

     6.31. Fiduciary Activities.  Except with respect to fiduciary and custodial
activities for individual  retirement accounts within the meaning of section 408
of the Code  ("IRAs"),  the Bank does not act, and since its  inception  has not
acted,  in a fiduciary  or  custodial  capacity  or  otherwise  conducted  trust
activities.  The Bank is exempt from registration  under the federal  Investment
Advisers Act of 1940, as amended. Since January 1, 1995, the Bank has conducted,
and currently is conducting,  all fiduciary and custodial activities for IRAs in
all material respects in accordance with all applicable law.

     6.32. Environmental Liability.

          (a) Except as set forth on Schedule  6.32 hereof,  neither the Company
nor the Bank is in material  violation  of any  judgment,  decree,  order,  law,
license, rule or regulation pertaining to environmental matters, including those
arising  under the Resource  Conservation  and Recovery  Act, the  Comprehensive
Environmental Response,  Compensation and Liability Act of 1980 ("CERCLA"),  the
Superfund  Amendments  and  Reauthorization  Act  of  1986,  the  Federal  Water
Pollution  Control Act, the Federal Clean Air Act, the Toxic Substances  Control
Act or any  state or  local  statute,  regulation,  ordinance,  order or  decree
relating to health, safety or the environment ("Environmental Laws").

          (b) Except as set forth on Schedule 6.32 hereof,  neither the Company,
the Bank,  nor, to the best of the knowledge of either of them,  any borrower of
the Company or of the Bank has received  notice that it has been  identified  by
the United States Environmental  Protection Agency as a potentially  responsible
party under  CERCLA with  respect to a site  listed on the  National  Priorities
List, 40 C.F.R.  Part 300 Appendix B, nor has the Company or the Bank or, to the
best of the  knowledge of either of them,  any borrower of the Company or of the
Bank received any notification that any hazardous waste, as defined by 42 U.S.C.
section  6903(5),  any  hazardous  substances,  as defined by 42 U.S.C.  section
9601(14),  any  "pollutant  or  contaminant,"  as defined  by 42 U.S.C.  section
9601(33), or any toxic substance,  hazardous materials,  oil, or other chemicals
or substances regulated by any Environmental Laws ("Hazardous  Substances") that
it has disposed of has been found at any site at which a federal or state agency
is  conducting  a  remedial  investigation  or  other  action  pursuant  to  any
Environmental Law.

          (c) No portion of any real property at any time owned or leased by the
Company or the Bank  (collectively,  the "Company Real Estate") has been used by
the  Company or the Bank for the  handling,  processing,  storage or disposal of
Hazardous  Substances in a manner which violates any Environmental  Laws and, to
the best of the  knowledge of the Company and the Bank, no  underground  tank or
other underground storage receptacle for Hazardous  Substances is located on any
of the Company Real Estate. In the


                                      A-25


<PAGE>


course of its  activities,  neither the Company nor the Bank has generated or is
generating  any  hazardous  waste on any of the Company  Real Estate in a manner
which  violates  any  Environmental  Laws.  There  has  been no past or  present
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting,  escaping, leaching, disposing or dumping (collectively, a "Release")
of Hazardous  Substances by the Company or the Bank on, upon, or into any of the
Company Real Estate.  In addition,  to the best of the  knowledge of the Company
and the Bank,  except as set forth on Schedule  6.32 hereof,  there have been no
such  Releases on, upon, or into any real property in the vicinity of any of the
Company Real Estate  that,  through soil or  groundwater  contamination,  may be
located on any of such Company Real Estate.

          (d) With respect to any real  property at any time held as  collateral
for  any  outstanding  loan  by the  Company  or  the  Bank  (collectively,  the
"Collateral Real Estate"),  except as set forth on Schedule 6.32 hereof, neither
the  Company  nor the Bank has since  January 1, 1988  received  notice from any
borrower  thereof or third party,  and has no knowledge,  that such borrower has
generated or is generating  any hazardous  waste on any of the  Collateral  Real
Estate in a manner which violates any Environmental  Laws or that there has been
any Release of Hazardous  Substances  by such  borrower on, upon, or into any of
the Collateral Real Estate, or that there has been any Release on, upon, or into
any real  property in the  vicinity of any of the  Collateral  Real Estate that,
through  soil  or  groundwater  contamination,  may be  located  on any of  such
Collateral Real Estate.

          (e) As used in this  Section  6.32,  each of the terms  "Company"  and
"Bank"  includes the applicable  entity and any  partnership or joint venture in
which it has an interest.

     6.33.  Intangible Property. To the best of the knowledge of the Company and
the Bank, each of the Company and the Bank owns or possesses the right,  free of
the claims of any third party,  to use all material  trademarks,  service marks,
trade  names,  copyrights,  patents,  and licenses  currently  used by it in the
conduct of its  business.  To the best of the  knowledge  of the Company and the
Bank, no material product or service offered and no material trademark,  service
mark, or similar  right used by the Company or the Bank  infringes any rights of
any other person,  and, as of the date hereof,  neither the Company nor the Bank
has received any written or oral notice of any claim of such infringement.

     6.34. Real and Personal  Property.  Except for property and assets disposed
of in the  ordinary  course  of  business,  each of the  Company  and  the  Bank
possesses good and marketable title to and owns, free and clear of any mortgage,
pledge,  lien, charge, or other encumbrance or other third party interest of any
nature  whatsoever  which  would  materially  interfere  with  the  business  or
operations of either the Company or the Bank, its real and personal property and
other assets, including without limitation those properties and assets reflected
in the Company Financial  Statements as of December 31, 1997, or acquired by the
Company or the Bank subsequent to the date thereof. The leases pursuant to which
the

                                      A-26

<PAGE>


Company and the Bank lease real or personal  property are valid and effective in
accordance with their respective  terms; and there is not, under any such lease,
any material  existing default or any event which,  with the giving of notice or
lapse of time or otherwise,  would constitute a material  default.  The real and
personal  property  leased by either  the  Company  or the Bank is free from any
adverse claim which would  materially  interfere  with its business or operation
taken as a whole.  The material  properties and equipment owned or leased by the
Company  and the Bank are in  normal  operating  condition,  free from any known
defects,  except  such minor  defects as do not  materially  interfere  with the
continued use thereof in the conduct of its normal operations.

     6.35. Loans, Leases, and Discounts.

          (a) To the best of the  knowledge  of the Company  and the Bank,  each
loan,  lease,  and discount  reflected as an asset of the Company in the Company
Financial  Statements as of December 31, 1997,  or acquired  since that date, is
the  legal,  valid,  and  binding  obligation  of  the  obligor  named  therein,
enforceable in accordance with its terms; and no loan, lease, or discount having
an unpaid  balance  (principal  and  accrued  interest)  in excess of $25,000 is
subject to any asserted defense, offset, or counterclaim known to the Company or
the Bank.

          (b) Except as set forth on Schedule  6.35 hereof,  neither the Company
nor the Bank holds any loans or loan-participation  interests purchased from, or
participates  in any loans  originated  by, any person other than the Company or
the Bank.

     6.36. Material  Contracts.  Neither the Company nor the Bank nor any of the
assets,  businesses,  or operations of either of them is as of the date hereof a
party to, or is bound or affected  by, or receives  benefits  under any material
agreement,  arrangement,  or commitment  not  cancelable by it without  penalty,
other  than (a) the  agreements  set  forth on  Schedule  6.36  hereof,  and (b)
agreements,  arrangements, or commitments entered into in the ordinary course of
its  business  consistent  with  past  practice,  or,  if there has been no past
practice, consistent with prudent banking practices.

     6.37.  Employment  and  Severance  Arrangements.  Schedule 6.37 hereof sets
forth

          (a) all employment contracts granted by the Company or the Bank to any
of its  officers,  directors,  shareholders,  consultants,  or other  management
officials  and any officer,  director,  shareholder,  consultant,  or management
official of any affiliate providing for increased or accelerated compensation in
the event of a change of control  with respect to the Company or the Bank or any
other event  affecting the ownership,  control,  or management of the Company or
the Bank; and


                                      A-27


<PAGE>

          (b)  all  employment   and  severance   contracts,   agreements,   and
arrangements  between  the  Company  or the  Bank  and  any  officer,  director,
consultant, or other management official of any of them.

     6.38.  Material  Contract  Defaults.  All  contracts,  agreements,  leases,
mortgages, or commitments referred to in Section 6.12(c) hereof are valid and in
full force and effect on the date hereof.  As of the date of this  Agreement and
as of the  Effective  Date,  neither  the  Company nor the Bank is or will be in
default  in  any  material  respect  under  any  material  contract,  agreement,
commitment,  arrangement,  lease, insurance policy, or other instrument to which
it is a party or by which its assets,  business,  or operations  may be bound or
affected  or under  which it or its  assets,  business,  or  operations  receive
benefits;  and there has not  occurred  any event that with the lapse of time or
the giving of notice or both would constitute such a default.

     6.39.  Capital  Expenditures.  Except as set forth on Schedule 6.39 hereof,
neither the Company nor the Bank has any  outstanding  commitments in the nature
of capital expenditures which in the aggregate exceed $25,000.

     6.40.  Repurchase  Agreements.  With respect to all agreements  pursuant to
which the Company or the Bank has purchased  securities  subject to an agreement
to resell,  it has a valid,  perfected  first lien or  security  interest in the
securities securing the agreement, and the value of the collateral securing each
such  agreement  equals  or  exceeds  the  amount  of the debt  secured  by such
collateral under such agreement.

     6.41.  Internal  Controls.  Each  of the  Company  and the  Bank  maintains
internal controls to provide reasonable  assurance to its board of directors and
officers that its assets are  safeguarded,  its records and reports are prepared
in compliance with all applicable legal and accounting requirements and with its
internal policies and practices,  and applicable federal,  state, and local laws
and regulations  are complied with.  These controls extend to the preparation of
its financial statements to provide reasonable assurance that the statements are
presented fairly in conformity with generally accepted accounting principles or,
in the case of the Bank and to the  extent  different  from  generally  accepted
accounting  principles,  accounting principles mandated by the OCC. The controls
contain  self-monitoring  mechanisms,  and  appropriate  actions  are  taken  on
significant deficiencies as they are identified.

     6.42. Dividends.  Neither the Company nor the Bank has paid any dividend to
its shareholders  which caused its regulatory capital to be less than the amount
then required by applicable  law, or which exceeded any other  limitation on the
payment of dividends imposed by law, agreement, or regulatory policy.


                                      A-28

<PAGE>



     6.43.  Brokers and  Advisers.  Except as set forth on Schedule 6.43 hereof,
(a) there are no claims for  brokerage  commissions,  finder's  fees, or similar
compensation  arising  out of or due to any act of the  Company  or the  Bank in
connection  with the  transactions  contemplated by this Agreement or based upon
any  agreement or  arrangement  made by or on behalf of the Company or the Bank,
and (b)  neither the Company  nor the Bank has  entered  into any  agreement  or
understanding with any party relating to financial advisory services provided or
to be provided with respect to the transactions contemplated by this Agreement.

     6.44.  Interest Rate Risk Management  Instruments.  Neither the Company nor
the  Bank is a party  to any  interest  rate  swaps,  caps,  floors,  or  option
agreements or other interest rate risk management  arrangements,  nor may any of
its  properties or assets be bound by any such swaps,  caps,  floors,  or option
agreements or other interest rate risk management arrangements.

     6.45.   Disclosure.   No  representation  or  warranty   hereunder  and  no
certificate,  statement,  or other document delivered by the Company or the Bank
hereunder  or in  connection  with  this  Agreement  or any of the  transactions
contemplated  thereunder  contains any untrue  statement  of a material  fact or
omits to  state a  material  fact  necessary  in  order  to make the  statements
contained herein, in light of the circumstances  under which they were made, not
misleading.  There  is no fact  known  to the  Company  which  reasonably  might
materially  adversely  affect  the  business,  assets,  liabilities,   financial
condition,  results of operations, or prospects of the Company or the Bank which
has not been  disclosed in the Company  Financial  Statements  or a  certificate
delivered to Zions Bancorp by the Company.  Copies of all documents  referred to
in this Agreement,  unless prepared solely by Zions Bancorp, Val Cor, or BCNA or
solely by Zions Bancorp,  Val Cor, or BCNA and third parties  hereto,  are true,
correct,  and complete copies thereof and include all  amendments,  supplements,
and modifications thereto and all waivers thereunder.

     6.46. Regulatory and Other Approvals.  As of the date hereof, except as set
forth on Schedule 6.46 hereof,  neither the Company nor the Bank is aware of any
reason why all material  consents and  approvals  shall not be procured from all
regulatory  agencies having  jurisdiction over the transactions  contemplated by
this Agreement,  as shall be necessary for (a)  consummation of the transactions
contemplated by this  Agreement,  and (b) the  continuation  after the Effective
Date of the business of the Company and the Bank as such  business is carried on
immediately  prior to the Effective Date, free of any conditions or requirements
which, in the reasonable  opinion of the Company,  could have a material adverse
effect upon the business, operations,  activities, earnings, or prospects of the
Company. As of the date hereof, neither the Company nor the Bank is aware of any
reason why all material  consents and  approvals  shall not be procured from all
other persons and entities  whose consent or approval shall be necessary for (y)
consummation of the  transactions  contemplated  by this  Agreement,  or (z) the
continuation  after the  Effective  Date of the  business of the Company and the
Bank as such business is carried on immediately prior to the Effective Date.


                                      A-29

<PAGE>



7.   COVENANTS OF THE COMPANY AND THE BANK.

     The  Company  (on behalf of itself and the Bank) and the Bank (on behalf of
itself) each hereby covenant and agree as follows:

     7.1.  Rights of Access.  In  addition  and not in  limitation  of any other
rights of access provided to Zions Bancorp,  Val Cor, and BCNA herein, until the
Effective Date the Company and the Bank will give to Zions Bancorp, Val Cor, and
BCNA and to their representatives, including their certified public accountants,
KPMG Peat Marwick LLP, full access during  normal  business  hours to all of the
property, documents,  contracts, books, and records of the Company and the Bank,
and such  information  with respect to their business  affairs and properties as
Zions Bancorp, Val Cor, or BCNA from time to time may reasonably request.

     7.2. Corporate Records, Contracts, etc.

          (a) The Company and the Bank will make available to Zions Bancorp, Val
Cor, and BCNA copies of their respective  articles of incorporation  and bylaws,
and will make available  their  respective  minute books,  all of which shall be
certified to be complete and true copies.

          (b) The  Company  and the  Bank  will  make  available  a copy of each
contract  or  agreement  to which the  Company  or the Bank is a party and which
requires one or more payments by the Company or the Bank in excess of $25,000 in
the  aggregate  to which the Company or the Bank is a party,  including  but not
limited to data processing contracts,  service contracts,  contracts to purchase
or lease real  property or  equipment,  guaranties,  employment  contracts,  and
insurance contracts pertaining to fire, accident,  indemnity,  fidelity, health,
life, hospitalization, or other employee benefits.

          (c) The Company and the Bank will furnish to Zions  Bancorp,  Val Cor,
and BCNA the following  information  with respect to properties  acquired by the
Company  and the  Bank  subsequent  to the date of this  Agreement:  (i) a brief
description and location of each parcel of real property owned by the Company or
the Bank,  (ii) a brief  description of real property  covered by lease or other
rental  arrangements  to which the  Company or the Bank is a party,  including a
copy of the relevant leases;  and (iii) a brief description of personal property
with a value in excess of $25,000 covered by lease or other rental  arrangements
to which the Company or the Bank is a party,  including  a copy of the  relevant
leases.

          (d) The Company and the Bank will furnish to KPMG Peat Marwick LLP the
officers' certificates contemplated by section 4.11(b), and other information as
KPMG


                                      A-30

<PAGE>



Peat  Marwick  LLP may  reasonably  request,  to enable it to provide the letter
contemplated by section 4.11(a).

     7.3. Monthly and Quarterly  Financial  Statements;  Minutes of Meetings and
Other Materials.

          (a) The  Company  and the Bank will  continue  to  prepare  all of the
monthly and quarterly  financial  statements and financial reports to regulatory
authorities for the months and quarterly  periods ending between January 1, 1998
and the Effective Date which it customarily  prepared  during the period between
January 1, 1995 and December 31, 1997 and shall  promptly  provide Zions Bancorp
with  copies  of all such  financial  statements  and  reports.  Such  financial
statements and reports shall be verified by the chief  financial  officer of the
reporting entity.  All of such financial  statements and reports,  including the
related  notes,  schedules,  and  memorandum  items,  will have been prepared in
accordance with generally accepted accounting principles applied in all material
respects (except that Consolidated Reports of Condition and Consolidated Reports
of Income  required to be filed by the Bank under federal law may be prepared in
accordance  with the  official  instructions  applicable  thereto at the time of
filing).

          (b) The Company and the Bank shall promptly provide Zions Bancorp with
(i) copies of all of its  periodic  reports to  directors  and to  shareholders,
whether or not such reports were prepared or  distributed  in connection  with a
meeting of the board of directors or a meeting of the shareholders,  prepared or
distributed  between the date of this Agreement and the Effective Date, and (ii)
complete  copies  of all  minutes  of  meetings  of its board of  directors  and
shareholders  which  meetings take place between the date of this  Agreement and
the  Effective  Date,  certified  by the  secretary  or cashier or an  assistant
secretary or assistant cashier of the Company or the Bank, as the case may be.

     7.4. Extraordinary Transactions. Without the prior written consent of Zions
Bancorp,  neither the  Company  nor the Bank will,  on or after the date of this
Agreement:  (a) declare or pay any cash  dividends  or property  dividends  with
respect to any class of its  capital  stock,  with the  exception  of  customary
periodic cash dividends paid by the Company or the Bank to holders of its common
stock at such intervals and in such amounts as are in every case consistent with
the  amounts  and  intervals  characteristic  of  that  payer;  (b)  declare  or
distribute any stock dividend,  authorize a stock split, or authorize,  issue or
make any distribution of its capital stock or any other  securities  (except for
issuances of Company Common Stock upon exercise of stock options  outstanding on
the date of this  Agreement),  or grant any options to acquire  such  additional
securities;  (c) merge into,  consolidate  with, or sell its assets to any other
corporation  or person,  or enter into any other  transaction or agree to effect
any other  transaction  not in the  ordinary  course of its  business  except as
explicitly  contemplated herein, or engage in any discussions  concerning such a
possible  transaction except as explicitly  contemplated herein; (d) convert the
charter or form of entity of the Bank from that in


                                      A-31

<PAGE>



existence on the date of this  Agreement to any other charter or form of entity;
(e) make any direct or indirect  redemption,  purchase,  or other acquisition of
any of its capital stock;  (f) except in the ordinary  course of its business or
to  accomplish  the  transactions  contemplated  by this  Agreement,  incur  any
liability or obligation, make any commitment or disbursement, acquire or dispose
of any  property  or  asset,  make any  contract  or  agreement,  pay or  become
obligated to pay any legal,  accounting,  or  miscellaneous  other  expense,  or
engage in any  transaction;  (g) other than in the ordinary  course of business,
subject any of its properties or assets to any lien, claim,  charge,  option, or
encumbrance;  (h) increase the rate or amount of compensation of any employee or
enter into any agreement to increase the rate or amount of  compensation  of any
employee,  except for increases in the ordinary course of business in accordance
with past  practices  which (A) result from payments  under any  arrangement  in
effect at January 1, 1998 for the payment of commissions, (B) in the case of any
other  salary  increases,  do not in the  aggregate  cause the  aggregate of all
salary  compensation  (excluding  commissions)  to exceed  104.5% of the  salary
compensation  which all  employees  would  have  received  for 1998 based on the
employees  and their  salaries  as of  January  1,  1998,  or (C) in the case of
compensation  in the nature of bonuses,  do not in the aggregate cause the bonus
compensation  for any  calendar  year to exceed 104.5  percent of the  aggregate
bonus compensation  expense for 1997; (i) create or modify any pension or profit
sharing plan, bonus, deferred  compensation,  death benefit, or retirement plan,
or the level of benefits  under any such plan,  nor  increase  or  decrease  any
severance or termination pay benefit or any other fringe benefit; (j) enter into
any employment or personal services contract with any person or firm,  including
without limitation any contract,  agreement, or arrangement described in Section
6.37(a) hereof,  except directly to facilitate the transactions  contemplated by
this Agreement; nor (k) purchase any loans or loan-participation interests from,
or participate in any loans  originated by, any person other than the Company or
the  Bank,  except  (A)  loans or  loan-participation  interests  originated  by
Piedmont Funding Corporation and (B) other loans or loan-participation interests
which,  when  aggregated  with all other  such  loans and  extensions  of credit
outstanding  from the  Company  and the  Bank  (taken  as a  whole)  to the same
"borrower" (as defined in 12 C.F.R. section 32.2(a)), do not exceed $200,000.

     7.5.  Preservation  of Business.  Each of the Company and the Bank will (a)
carry on its  business  and  manage its assets  and  properties  diligently  and
substantially  in the same manner as  heretofore;  (b) maintain the ratio of its
loans to its deposits at approximately the same level as existed at December 31,
1997, as adjusted to allow for seasonal  fluctuations of loans and deposits of a
kind and amount  experienced  traditionally  by it;  (c)  manage its  investment
portfolio in  substantially  the same manner and pursuant to  substantially  the
same investment  policies as in 1996 and 1997, and will take no action to change
the percentage which its investment  portfolio bears to its total assets,  or to
lengthen the average maturity of its investment portfolio, or of any significant
category  thereof,  to any material  extent;  (d) continue in effect its present
insurance coverage on all properties,  assets,  business, and personnel; (e) use
its best  efforts  to  preserve  its  business  organization  intact;  except as
otherwise  consented  to  by  Zions  Bancorp,  to  keep  available  its  present
employees; and to


                                      A-32

<PAGE>



preserve its present  relationships  with  customers and others having  business
dealings  with it; (f) not do anything  and not fail to do  anything  which will
cause  a  breach  of or  default  in any  contract,  agreement,  commitment,  or
obligation to which it is a party or by which it may be bound; (g) not amend its
articles  of  incorporation  or  bylaws;   and  (h)  not  grant  or  expand  any
shareholders' rights to dissent from any merger.

     7.6. [reserved]

     7.7.  Affiliates'  Agreements.  The Company will furnish to Zions Bancorp a
list of all  persons  known  to the  Company  who at the  date of the  Company's
special meeting of shareholders  to vote upon the  transactions  contemplated by
this  Agreement  may be deemed to be  "affiliates"  of the  Company  within  the
meaning  of Rule 145  under  the 1933 Act and for  purposes  of  qualifying  the
Holding  Company  Merger for "pooling of interests"  accounting  treatment.  The
Company will use its best efforts to cause each such  "affiliate" of the Company
to deliver to Zions  Bancorp not later than  thirty days prior to the  Effective
Date a written  agreement  providing  that such  person  will not sell,  pledge,
transfer,  or  otherwise  dispose  of (a) the  shares of  Company  Common  Stock
beneficially  owned by such person,  or the shares of Zions  Bancorp Stock to be
received by such  person in the Holding  Company  Merger  (the  "Company  Merger
Shares") or any other shares of Zions  Bancorp  Stock held by such person during
the period commencing thirty days prior to the Effective Date and ending at such
time as financial results covering at least thirty days of post-Holding  Company
Merger  combined  operations  have been published  within the meaning of Section
201.01 of the SEC's  Codification  of  Financial  Reporting  Policies or (b) the
Company Merger Shares except in compliance with the applicable provisions of the
1933 Act and the rules and regulations thereunder.

     7.8. Inconsistent  Activities.  Unless and until the Holding Company Merger
has been  consummated or this Agreement has been  terminated in accordance  with
its terms,  neither  the  Company  nor the Bank will (a)  solicit or  encourage,
directly or  indirectly,  any  inquiries  or  proposals  to acquire  more than 1
percent of the  Company  Common  Stock or any  capital  stock of the Bank or any
significant  portion  the  assets of either of them  (whether  by tender  offer,
merger,  purchase of assets, or other  transactions of any type); (b) afford any
third  party  which  may be  considering  any  such  transaction  access  to its
properties,  books or records except as required by mandatory provisions of law;
(c) enter into any discussions or negotiations  for, or enter into any agreement
or understanding  which provides for, any such transaction,  or (d) authorize or
permit any of its directors,  officers,  employees or agents to do or permit any
of the  foregoing.  If the  Company  or the Bank  becomes  aware of any offer or
proposed  offer to acquire  any shares of its capital  stock or any  significant
portion of its assets (regardless of the form of the proposed transaction) or of
any other  matter  which  could  adversely  affect this  Agreement,  the Holding
Company Merger,  or the Bank Merger,  the Company and the Bank shall immediately
give notice thereof to Zions Bancorp.


                                      A-33

<PAGE>



     7.9. Accrual and Payment of Officers' Bonuses.

          (a) For each month in 1998,  the Bank shall accrue  one-twelfth of the
estimated  cost of year-end  bonuses to be paid to officers of the Bank for 1998
in the  ordinary  course of  business  in  accordance  with past  practices  and
consistent with the restrictions in section 7.4(h).

          (b)  Neither the Company nor the Bank will pay any bonuses to officers
of the Company or the Bank except from amounts  accrued  therefor in  accordance
with paragraph (a) of this section 7.9.

8.   REPRESENTATIONS AND WARRANTIES OF ZIONS BANCORP, VAL COR, AND BCNA.

     Zions Bancorp (with  respect to itself,  Val Cor, and BCNA),  Val Cor (with
respect to itself and  BCNA),  and BCNA  (solely  with  respect to itself)  each
represent and warrant to the Company and the Bank as follows:

     8.1.  Organization,  Powers, and Qualification.  Each of Zions Bancorp, Val
Cor, and BCNA is a corporation which is duly organized, validly existing, and in
good standing under the laws of its  jurisdiction of  incorporation  and has all
requisite  corporate  power and authority to own and operate its  properties and
assets,  to lease properties used in its business,  and to carry on its business
as now conducted.  Each of Zions Bancorp, Val Cor, and BCNA owns or possesses in
the  operation  of  its  business  all  franchises,  licenses,  permits,  branch
certificates,   consents,   approvals,   waivers,   and  other   authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now  conducted,  except  for  those  where  the  failure  of such  ownership  or
possession  would not  adversely  affect its  operation  and  properties  in any
material respect. Each of Zions Bancorp, Val Cor, and BCNA is duly qualified and
licensed to do business and is in good standing in every  jurisdiction  in which
such  qualification  or license is required or with respect to which the failure
to be so qualified or licensed  could result in material  liability or adversely
affect its operation and properties in any material respect.

     8.2.  Execution and  Performance of Agreement.  Each of Zions Bancorp,  Val
Cor, and BCNA has all  requisite  corporate  power and  authority to execute and
deliver this Agreement and to perform its respective terms.

     8.3. Binding Obligations; Due Authorization. This Agreement constitutes the
valid,  legal,  and binding  obligations of each of Zions Bancorp,  Val Cor, and
BCNA enforceable  against it in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy,  insolvency, moratorium or similar law,
or by general principles of equity. The execution,  delivery, and performance of
this Agreement and the transactions contemplated


                                      A-35

<PAGE>



thereby have been duly and validly  authorized by the board of directors of each
of Zions Bancorp, Val Cor, and BCNA. No other corporate  proceedings on the part
of any of them are necessary to authorize  this Agreement or the carrying out of
the transactions contemplated hereby.

     8.4.  Absence of Default.  None of the  execution  or the  delivery of this
Agreement,  the consummation of the  transactions  contemplated  hereby,  or the
compliance with or fulfillment of the terms hereof will conflict with, or result
in a breach of any of the terms,  conditions,  or provisions of, or constitute a
default under the organizational  documents or bylaws of Zions Bancorp, Val Cor,
or BCNA. None of such execution,  consummation, or fulfillment will (a) conflict
with, or result in a material breach of the terms, conditions, or provisions of,
or constitute a material violation,  conflict, or default under, or give rise to
any right of  termination,  cancellation,  or  acceleration  with respect to, or
result in the creation of any lien,  charge,  or  encumbrance  upon,  any of the
property or assets of Zions  Bancorp,  Val Cor, or BCNA pursuant to any material
agreement  or  instrument  under  which it is  obligated  or by which any of its
properties or assets may be bound,  including  without  limitation  any material
lease,  contract,  mortgage,  promissory  note,  deed  of  trust,  loan,  credit
arrangement  or other  commitment or arrangement of it in respect of which it is
an  obligor,  or (b) if the Holding  Company  Merger is approved by the Board of
Governors  under the BHC, or if the Board of Governors  waives its  jurisdiction
over the Holding Company Merger,  and if the  transactions  contemplated by this
Agreement  are approved by the OCC,  the  Commissioner,  and the Banking  Board,
violate any law,  statute,  rule, or  regulation of any  government or agency to
which  Zions  Bancorp,  Val Cor, or BCNA is subject and which is material to its
operations,  or (c) violate any judgment,  order, writ,  injunction,  decree, or
ruling to which it or any of its properties or assets is subject or bound.  None
of the  execution  or  delivery  of  this  Agreement,  the  consummation  of the
transactions  contemplated thereby, or the compliance with or fulfillment of the
terms thereof will require any authorization, consent, approval, or exemption by
any person  which has not been  obtained,  or any notice or filing which has not
been given or done,  other than approval of or waiver of  jurisdiction  over the
transactions  contemplated by this Agreement by the Board of Governors, the OCC,
the Commissioner, and the Banking Board.

     8.5. Brokers and Advisers.

          (a) There are no claims for brokerage  commissions,  finder's fees, or
similar compensation arising out of or due to any act of Zions Bancorp, Val Cor,
or BCNA in connection  with the  transactions  contemplated by this Agreement or
based upon any agreement or arrangement made by or on behalf of any of them.

          (b) None of Zions  Bancorp,  Val Cor,  nor BCNA has  entered  into any
agreement  or  understanding  with any  party  relating  to  financial  advisory
services   provided  or  to  be  provided  with  respect  to  the   transactions
contemplated by this Agreement.


                                      A-35

<PAGE>



     8.6. Books and Records. The books and records of each of Zions Bancorp, Val
Cor, and BCNA fairly reflect the transactions to which it is a party or by which
its properties  are subject or bound.  Such books and records have been properly
kept and  maintained  and are in  compliance  in all material  respects with all
applicable legal and accounting  requirements.  Each of Zions Bancorp,  Val Cor,
and  BCNA  follows  generally  accepted  accounting   principles  applied  on  a
consistent  basis in the preparation and maintenance of its books of account and
financial  statements,  including  but not  limited  to the  application  of the
accrual method of accounting for interest  income on loans,  leases,  discounts,
and investments, interest expense on deposits and all other liabilities, and all
other items of income and expense.  Each of Zions Bancorp, Val Cor, and BCNA has
made all accruals in amounts which  accurately  report income and expense in the
proper periods in accordance with generally accepted accounting principles. Each
of Zions Bancorp,  Val Cor, and BCNA has filed all material  reports and returns
required by any law or regulation to be filed by it.

     8.7. Financial  Statements.  Zions Bancorp has furnished to the Company its
consolidated  statement of  condition as of each of December 31, 1995,  December
31,  1996,  and December 31,  1997,  and its related  consolidated  statement of
income,   consolidated   statement  of  changes  in  financial   position,   and
consolidated  statement  of  changes  in  stockholders'  equity  for each of the
periods  then  ended,  and  the  notes  thereto,  each  as  filed  with  the SEC
(collectively,   the  "Zions  Bancorp  Financial   Statements").   Each  of  the
consolidated  balance sheets included in the Zions Bancorp Financial  Statements
complied  as to  form  in  all  material  respects  with  applicable  accounting
requirements   (including  accounting   requirements  of  financial  institution
regulatory  authorities) and the published rules and regulations of the SEC with
respect thereto,  fairly presented the consolidated  financial position of Zions
Bancorp  and its  subsidiaries  as of its  date,  and  each of the  consolidated
statements of income, of stockholders' equity, and of cash flows included in the
Zions Bancorp  Financial  Statements fairly presented the results of operations,
stockholders'  equity,  and cash flows of Zions Bancorp and its subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements,  to
normal  year-end audit  adjustments),  in each case in accordance with generally
accepted  accounting  principles,   consistently  applied,  and  the  accounting
requirements of financial institution regulatory authorities, during the periods
involved, except as may be noted therein.

     8.8.  Absence of Certain  Developments.  Since December 31, 1997, there has
been (a) no material  adverse change in the  condition,  financial or otherwise,
assets,  properties,  liabilities,  or businesses of Zions  Bancorp,  and (b) no
material  deterioration in the quality of the loan portfolio of Zions Bancorp or
of any  major  component  thereof,  and no  material  increase  in the  level of
nonperforming assets or nonaccrual loans at Zions Bancorp or in the level of its
provision for credit losses or its reserve for possible credit losses.

     8.9.   Disclosure.   No  representation   or  warranty   hereunder  and  no
certificate,  statement,  or other document delivered by Zions Bancorp, Val Cor,
or BCNA hereunder or in


                                      A-36

<PAGE>



connection  with  this  Agreement  or  any  of  the  transactions   contemplated
thereunder  contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the  statements  contained  herein,  in
light of the circumstances under which they were made, not misleading.  There is
no fact  known to  Zions  Bancorp,  Val  Cor,  or BCNA  which  might  materially
adversely affect its business, assets, liabilities, financial condition, results
of  operations,  or prospects  which has not been disclosed in the Zions Bancorp
Financial Statements or a certificate delivered by Zions Bancorp to the Company.
Copies of all documents referred to in this Agreement, unless prepared solely by
the Company and the Bank or solely by the Company and the Bank and third parties
hereto,  are  true,  correct,  and  complete  copies  thereof  and  include  all
amendments, supplements, and modifications thereto and all waivers thereunder.

9.   CLOSING.

     9.1. Place and Time of Closing.  Closing shall take place at the offices of
Zions Bancorp,  One South Main,  Suite 1380, Salt Lake City, Utah, or such other
place as the  parties  choose,  commencing  at 10:00 a.m.,  local  time,  on the
Effective Date, provided that all conditions precedent to the obligations of the
parties hereto to close have then been met or waived.

     9.2. Events To Take Place at Closing. At the Closing, the following actions
will be taken:

          (a) Such  certificates  and other  documents  as are  required by this
Agreement to be executed and  delivered  on or prior to the  Effective  Date and
have  not been so  executed  and  delivered,  and such  other  certificates  and
documents as are mutually  deemed by the parties to be otherwise  desirable  for
the effectuation of the Closing, will be so executed and delivered; and then

          (b) the Holding  Company  Merger and the  issuance of shares  incident
thereto  shall be  effected;  provided,  however,  that the  administrative  and
ministerial  aspects of the issuance of shares  incident to the Holding  Company
Merger  will be  settled as soon  thereafter  as shall be  reasonable  under the
circumstances; and then

          (c) the Bank Merger shall be effected.


10.  TERMINATION, DAMAGES FOR BREACH, WAIVER, AND AMENDMENT.

     10.1.  Termination  by  Reason  of  Lapse of Time.  This  Agreement  may be
terminated  by any  party on or after  January  31,  1999,  by  instrument  duly
authorized and executed and


                                      A-37

<PAGE>



delivered to the other parties, unless the Effective Date shall have occurred on
or before such date.

     10.2. Grounds for Termination.  This Agreement may be terminated by written
notice of termination  at any time before the Effective Date (whether  before or
after action by shareholders of the Company):

          (a) by mutual consent of the parties hereto;

          (b) by Zions Bancorp,  upon written notice to the Company given at any
time (i) if any of the representations and warranties of the Company or the Bank
contained in Section 6 hereof was materially incorrect when made, or (ii) in the
event of a material breach or material failure by the Company or the Bank of any
covenant or  agreement of the Company or the Bank  contained  in this  Agreement
which has not been, or cannot be, cured within thirty days after written  notice
of such breach or failure is given to the  Company or the Bank,  as the case may
be;

          (c) by the Company,  upon written notice to Zions Bancorp given at any
time (i) if any of the representations and warranties of Zions Bancorp, Val Cor,
or BCNA  contained in Section 8 hereof was  materially  incorrect  when made, or
(ii) in the event of a material breach or material failure by Zions Bancorp, Val
Cor, or BCNA of any  covenant or agreement  of Zions  Bancorp,  Val Cor, or BCNA
contained  in this  Agreement  which has not been,  or cannot be,  cured  within
thirty  days after  written  notice of such  breach or failure is given to Zions
Bancorp, Val Cor, or BCNA, as the case may be; or

          (d) by either Zions  Bancorp or the Company upon written  notice given
to the other if the board of directors  of either  Zions  Bancorp or the Company
shall  have  determined  in its sole  judgment  made in good  faith,  after  due
consideration and consultation with counsel, that the Holding Company Merger has
become  inadvisable or  impracticable by reason of the institution of litigation
by the  federal  government  or the  government  of the State of Colorado or the
State of Utah to restrain or invalidate the  transactions  contemplated  by this
Agreement.

     10.3.  Effect  of  Termination.   In  the  event  of  the  termination  and
abandonment  hereof  pursuant to the provisions of Section 10.1 or Section 10.2,
this  Agreement  shall  become  void and have no force or  effect,  without  any
liability on the part of Zions Bancorp, Val Cor, BCNA, the Company, the Bank, or
their  respective  directors  or  officers or  shareholders,  in respect of this
Agreement.  Notwithstanding  the  foregoing,  (a) as provided in Section 11.4 of
this Agreement,  the  confidentiality  agreement contained in that section shall
survive such termination,  and (b) if such termination is a result of any of the
representations  and warranties of a party being materially  incorrect when made
or a result of the material breach or material  failure by a party of a covenant
or agreement hereunder, such party whose


                                      A-38

<PAGE>



representations  and  warranties  were  materially  incorrect or who  materially
breached or failed to perform its covenant or  agreement  shall be liable in the
amount of $500,000 to the other party or parties  hereto that are not affiliated
with it.

     10.4. Waiver of Terms or Conditions. Any of the terms or conditions of this
Agreement  may be waived at any time  prior to the  Effective  Date by the party
which is, or whose shareholders are, entitled to the benefit thereof,  by action
taken by that  party (if an  individual)  or by the board of  directors  of such
party (if a corporation), or by its chairman, or by its president; provided that
such waiver  shall be in writing and shall be taken only if, in the  judgment of
the party, board of directors,  or officer taking such action,  such waiver will
not have a materially adverse effect on the benefits intended hereunder to it or
to the shareholders of its or his corporation;  and the other parties hereto may
rely on the delivery of such a waiver as  conclusive  evidence of such  judgment
and the validity of the waiver.

     10.5. Amendment.

          (a) Anything herein or elsewhere to the contrary  notwithstanding,  to
the extent  permitted by law,  this  Agreement  and the  exhibits  hereto may be
amended, supplemented, or interpreted at any time prior to the Effective Date by
written  instrument  duly authorized and executed by each of the parties hereto;
provided,  however,  that this  Agreement may not be amended after the action by
shareholders  of the Company or  shareholders  of BCNA in any respect that would
prejudice  the  economic   interests  of  such  Company   shareholders  or  BCNA
shareholders,  as the  case  may be,  or any of  them,  except  as  specifically
provided herein or by like action of such shareholders.

          (b) If  Zions  Bancorp  and  the  Company  should  mutually  determine
(following  receipt  of advice  of legal or other  counsel)  that it has  become
inadvisable or inexpedient to effectuate the  transactions  contemplated by this
Agreement through means of a sequence of mergers such as is contemplated herein,
then the parties  hereto agree to effect such change in the form of  transaction
as described  especially  in Sections  1.1 and 9.2 of this  Agreement by written
instrument in amendment of this Agreement.

          (c) The parties to this Agreement  acknowledge that BCNA is a party to
an  unrelated  agreement  and plan of  reorganization  pursuant to which BCNA is
scheduled to be consolidated  with State Bank and Trust of Colorado  Springs,  a
Colorado  banking  corporation,  in a transaction that will cause a new national
banking  association to be formed under the name of BCNA (the  "Consolidation").
The  parties  hereto  agree that  nothing in this  Agreement  shall  preclude or
condition the right of BCNA to  participate  in the  Consolidation.  The parties
hereto further agree that, if the Consolidation shall have occurred prior to the
Effective  Date,  then  the  parties  will  effect  such  change  in the form of
transaction,  by written  instrument in amendment of this  Agreement and of such
other agreements  between or among the parties hereto or any of them as shall be
implicated herein, as shall be necessary or


                                      A-39

<PAGE>



advisable to cause the Bank to merge into the new national  banking  association
resulting from the Consolidation.


11.  GENERAL PROVISIONS.

     11.1. Allocation of Costs and Expenses. Except as provided in this Section,
each  party  hereto  shall  pay its own fees  and  expenses,  including  without
limitation the fees and expenses of its own counsel and its own  accountants and
tax advisers,  incurred in connection  with this Agreement and the  transactions
contemplated thereby. For purposes of this Section, (i) the cost of printing and
delivering  the  proxy  statement  and  other  material  to  be  transmitted  to
shareholders  of the  Company  shall be deemed to be  incurred  on behalf of the
Company,  (ii) the cost of registering  under federal and state  securities laws
the stock of Zions  Bancorp to be  received by the  shareholders  of the Company
shall be deemed to be incurred on behalf of Zions Bancorp, and (iii) the cost of
procuring the tax opinion  referred to in section 3.4 of this Agreement shall be
deemed  to be  incurred  on  behalf  of the  Company  (provided,  that,  if this
Agreement shall be terminated pursuant to section 10.2, the Company shall not be
responsible for fees and expenses relating to such opinion in excess of $6,000).

     11.2.  Mutual  Cooperation.  Subject  to the  terms and  conditions  herein
provided,  each party shall use its best efforts, and shall cooperate fully with
the other party, in expeditiously  carrying out the provisions of this Agreement
and in expeditiously making all filings and obtaining all necessary governmental
approvals,  and as soon as practicable shall execute and deliver, or cause to be
executed and delivered, such governmental notifications and additional documents
and  instruments  and do or cause to be done all  additional  things  necessary,
proper,  or advisable  under  applicable law to consummate and make effective on
the earliest practicable date the transactions contemplated hereby.

     11.3.  Form of Public  Disclosures.  Zions  Bancorp and the  Company  shall
mutually agree in advance upon the form and substance of all public  disclosures
concerning this Agreement and the transactions  contemplated  hereby. Until this
Agreement or the transactions  contemplated thereby have been publicly announced
in accordance with this section 11.3, no party to this Agreement shall issue any
press release or make any public announcement relating to this Agreement without
the prior  approval of all of the other  parties;  provided,  however,  that any
party may make any public disclosure which it believes in good faith is required
to be made to comply with applicable laws or regulations or the order of a court
or other regulatory body of competent jurisdiction, in which case the disclosing
party will advise the other parties prior to making the disclosure.

     11.4. Confidentiality. Zions Bancorp, Val Cor, BCNA, the Company, the Bank,
and their  respective  subsidiaries  shall use all information that each obtains
from the other pursuant to this  Agreement  solely for the  effectuation  of the
transactions contemplated by this


                                      A-41

<PAGE>



Agreement or for other purposes  consistent  with the intent of this  Agreement.
Neither  Zions  Bancorp,  Val Cor,  BCNA,  the  Company,  the  Bank,  nor  their
respective subsidiaries shall use any of such information for any other purpose,
including,  without  limitation,  the competitive  detriment of any other party.
Zions Bancorp, Val Cor, and BCNA, on the one hand, and the Company and the Bank,
on the other hand, shall maintain as strictly  confidential all information each
of them  learns from the other and shall,  at any time,  upon the request of the
other, return promptly to it all documentation  provided by it or made available
to third  parties.  Each of the parties may  disclose  such  information  to its
respective affiliates,  counsel, accountants, tax advisers, and consultants. The
confidentiality  agreement contained in this Section 11.4 shall remain operative
and in full  force  and  effect,  and  shall  survive  the  termination  of this
Agreement.

     11.5. Claims of Brokers.

          (a) Each of the Company and the Bank shall indemnify, defend, and hold
Zions  Bancorp,  Val Cor, and BCNA  harmless for,  from,  and against any claim,
suit, liability,  fees, or expenses (including,  without limitation,  attorneys'
fees and costs of court)  arising  out of any claim for  brokerage  commissions,
finder's  fees, or similar  compensation  arising out of or due to any of its or
his acts in connection with the  transactions  contemplated by this Agreement or
based  upon  any  agreement  or  arrangement  made by it or him or on its or his
behalf with respect to Zions Bancorp, Val Cor, or BCNA.

          (b) Each of Zions Bancorp, Val Cor, and BCNA shall indemnify,  defend,
and hold the Company and the Bank  harmless  for,  from,  and against any claim,
suit, liability,  fees, or expenses (including,  without limitation,  attorneys'
fees and costs of court)  arising  out of any claim for  brokerage  commissions,
finder's fees, or similar  compensation arising out of or due to any of its acts
in connection  with any of the  transactions  contemplated  by this Agreement or
based upon any agreement or arrangement made by it or on its behalf with respect
to the Company or the Bank.

     11.6. Information for Applications and Registration Statement.

          (a) Each party represents and warrants that all information concerning
it  which  is  included  in  any  statement  and   application   (including  the
Registration  Statement) made to any governmental  agency in connection with the
transactions  contemplated  by this  Agreement  shall not,  with respect to such
party, omit any material fact required to be stated therein or necessary to make
the statements made, in light of the  circumstances  under which they were made,
not misleading. The party so representing and warranting will indemnify, defend,
and  hold  harmless  the  other,  each  of  its  directors  and  officers,  each
underwriter  and each person,  if any, who controls the other within the meaning
of the Securities Act, for, from and against any and all losses,  claims, suits,
damages,  expenses, or liabilities to which any of them may become subject under
applicable laws (including, but not limited to, the Securities


                                      A-41

<PAGE>



Act and the  Exchange  Act)  and  rules  and  regulations  thereunder  and  will
reimburse  them for any legal or other expenses  reasonably  incurred by them in
connection with  investigating or defending any actions whether or not resulting
in liability, insofar as such losses, claims, damages, expenses, liabilities, or
actions  arise out of or are based upon any untrue  statement or alleged  untrue
statement of a material fact  contained in any such  application or statement or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary in order to make the
statements  therein not  misleading,  but only insofar as any such  statement or
omission was made in reliance upon and in conformity with information  furnished
in writing by the  representing  and warranting party expressly for use therein.
Each  party  agrees at any time upon the  request of the other to furnish to the
other a written letter or statement  confirming the accuracy of the  information
contained  in any proxy  statement,  registration  statement,  report,  or other
application or statement,  and confirming that the information contained in such
document was  furnished  expressly  for use therein or, if such is not the case,
indicating  the  inaccuracies  contained in such document or draft or indicating
the information not furnished expressly for use therein. The indemnity agreement
contained in this Section  11.6(a) shall remain  operative and in full force and
effect, regardless of any investigation made by or on behalf of any of the other
parties, and shall survive the termination of this Agreement or the consummation
of the transactions contemplated thereby.

          (b) In  order  to  provide  for just  and  equitable  contribution  in
circumstances in which the indemnity  agreement  contained in Section 11.6(a) of
this Agreement is for any reason held by a court of competent jurisdiction to be
unenforceable as to any or every party,  then the parties in such  circumstances
shall  contribute  to the  aggregate  losses,  claims,  damages and  liabilities
(including any  investigation,  legal and other expenses  incurred in connection
with, and any amounts paid in settlement  of, any action,  suit or proceeding or
any claims asserted) to which any party may be subject in such proportion as the
court of law determines based on the relative fault of the parties.

     11.7. Standard of Materiality.

          (a) For purposes of Sections 4, 6, and 7 of this Agreement,  the terms
"material"  and  "materially,"  when  used  with  reference  to  items  normally
expressed in dollars,  shall be deemed to refer to amounts  individually  and in
the aggregate in excess of 3 percent of the shareholders'  equity of the Company
as of December 31, 1997, as determined in  accordance  with  generally  accepted
accounting principles.

          (b) For  purposes  of  Sections 5 and 8 of this  Agreement,  the terms
"material"  and  "materially,"  when  used  with  reference  to  items  normally
expressed in dollars,  shall be deemed to refer to amounts  individually  and in
the  aggregate  in  excess  of 3 percent  of the  shareholders'  equity of Zions
Bancorp as of December 31, 1997,  as determined  in  accordance  with  generally
accepted accounting principles.


                                      A-42

<PAGE>


          (c) For other purposes and, notwithstanding subsections (a) and (b) of
this section 11.7, when used anywhere in this Agreement with explicit  reference
to any of the federal  securities  laws or to the  Registration  Statement,  the
terms  "material"  and  "materially"   shall  be  construed  and  understood  in
accordance  with  standards of materiality  as judicially  determined  under the
federal securities laws.

     11.8. Covenants of Zions Bancorp.

          (a) From the date hereof to the Effective  Date,  Zions Bancorp shall,
contemporaneously with the filing with the SEC of any periodic or current report
pursuant to section 13 of the Exchange Act, deliver a copy of such report to the
Company.

          (b) Following  the  Effective  Date neither Val Cor nor BCNA will take
any action to abrogate  or diminish  any right  accorded  under the  articles of
incorporation or by-laws of the Company or the Bank as they existed  immediately
prior to the  Effective  Date to any person  who,  on or prior to the  Effective
Date,  was a director or officer of the  Company or the Bank to  indemnification
from  or  against  losses,  expenses,  claims,  demands,  damages,  liabilities,
judgments,  fines,  penalties,  costs,  expenses  (including  without limitation
reasonable  attorneys  fees) and amounts  paid in  settlement  pertaining  to or
incurred in connection  with any threatened or actual action,  suit,  claim,  or
proceeding   (whether   civil,   criminal,   administrative,   arbitration,   or
investigative) arising out of events,  matters,  actions, or omissions occurring
on or prior to the Effective  Date. To the extent not provided by the foregoing,
following the Effective  Date and to the extent  permitted by law, all rights to
such indemnification accorded under the articles of incorporation and by-laws of
the Company or the Bank to any person who,  on or prior to the  Effective  Date,
was a director or officer of the Company or the Bank shall survive the Effective
Date and,  following  the Holding  Company  Merger and the Bank  Merger,  to the
extent  permitted  by law,  Val Cor and BCNA  will  honor  such  obligations  in
accordance with their terms with respect to events, acts, or omissions occurring
prior to the Effective Date.

          (c) If, after the date hereof and prior to the  Effective  Date or the
termination  of this  Agreement,  the  Company or the Bank shall  request  Zions
Bancorp=s consent to purchase any loans or loan  participations,  or participate
in loans,  which  purchases or loans are  restricted in accordance  with section
7.4(k) of this  Agreement,  Zions  Bancorp  agrees to advise the  Company or the
Bank,  within two business days of receipt by Zions Bancorp of documentation and
information with respect thereto reasonably  acceptable to Zions Bancorp,  as to
whether Zions Bancorp will consent to such purchase or participation.

     11.9.  Adjustments  for Certain  Events.  Anything in this agreement to the
contrary  notwithstanding,  all prices per share,  share amounts,  and per-share
amounts referred to in this Agreement shall be appropriately adjusted to account
for  stock  dividends,  split-ups,  mergers,  recapitalizations,   combinations,
conversions, exchanges of shares or the like, but not for


                                      A-43

<PAGE>



normal and recurring cash dividends declared or paid in a manner consistent with
the established practice of the payer.

     11.10.  Stock  Repurchases.  The Company and the Bank acknowledge that from
time to time Zions  Bancorp  repurchases  shares of its common stock in the open
market in accordance with market conditions.  Nothing in this Agreement shall be
construed  to  abridge  the  right  of Zions  Bancorp  to  continue  to do so in
compliance  with  Exchange Act rules and  regulations  and pursuant to advice of
independent securities counsel for Zions Bancorp.

     11.11.  Counterparts.  This  Agreement  may be  executed  in  two  or  more
counterparts  each of which shall be deemed to constitute an original,  but such
counterparts  together shall be deemed to be one and the same  instrument and to
become effective when one or more  counterparts  have been signed by each of the
parties  hereto.  It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.

     11.12. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto with respect to their commitments to one another and their
undertakings  vis-a-vis one another on the subject matter  hereof.  Any previous
agreements or  understandings  among the parties  regarding  the subject  matter
hereof  are  merged  into and  superseded  by this  Agreement.  Nothing  in this
Agreement express or implied is intended or shall be construed to confer upon or
to give any person,  other than Zions Bancorp,  Val Cor, BCNA, the Company,  the
Bank,  and their  respective  shareholders,  any rights or remedies  under or by
reason of this Agreement.

     11.13.  Survival  of  Representations,   Warranties,   and  Covenants.  The
respective  representations,  warranties,  and  covenants  of each party to this
Agreement  are hereby  declared  by the other  parties to have been relied on by
such other  parties and shall survive the  Effective  Date.  Each party shall be
deemed to have relied  upon each and every  representation  and  warranty of the
other parties regardless of any investigation heretofore or hereafter made by or
on behalf of such party.

     11.14.  Section Headings.  The section and subsection  headings herein have
been inserted for  convenience  of reference  only and shall in no way modify or
restrict  any of the terms or  provisions  hereof.  Any  reference to a "person"
herein shall  include an  individual,  firm,  corporation,  partnership,  trust,
government  or  political  subdivision  or  agency or  instrumentality  thereof,
association, unincorporated organization, or any other entity.

     11.15.  Notices.  All notices,  consents,  waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or


                                     AA-44

<PAGE>



sent by registered or certified mail, return receipt requested, postage prepaid.
All communications  shall be addressed to the appropriate  address of each party
as follows:

If to Zions Bancorp, Val Cor, or BCNA:

           Zions Bancorporation
           One South Main, Suite 1380
           Salt Lake City, Utah  84111

           Attention:  Mr. Harris H. Simmons
                       President and Chief Executive Officer

With a required copy to:

           Brian D. Alprin, Esq.
           Duane, Morris & Heckscher LLP
           1667 K Street, N.W., Suite 700
           Washington, D.C.  20006

If to the Company or the Bank:

           Mountain Financial Holding Company
           361 W. Highway 24
           Woodland Park, Colorado 80866-9039

           Attention:  James P. Oaks
                       President and Chief Executive Officer

With a required copy to:

           David L. Shakes, Esq.
           Hendricks, Hendricks & Shakes, P.C.
           4055 Nonchalant Circle South
           Colorado Springs, Colorado  80917-2948

     All such notices shall be deemed to have been given on the date  delivered,
transmitted, or mailed in the manner provided above.

     11.16.  Choice of Law and  Venue.  This  Agreement  shall be  governed  by,
construed,  and  enforced  in  accordance  with the  laws of the  State of Utah,
without giving effect to the principles of conflict of law thereof.  The parties
hereby designate Salt Lake County, Utah


                                      A-45

<PAGE>



and Teller County,  Colorado to be proper  jurisdictions and venues for any suit
or  action  arising  out of this  Agreement.  Each of the  parties  consents  to
personal  jurisdiction  in each of such venues for such a proceeding  and agrees
that it may be served with process in any action with respect to this  Agreement
or the transactions contemplated thereby by certified or registered mail, return
receipt  requested,  or to its  registered  agent for  service of process in the
state of Utah or Colorado.  Each of the parties  irrevocably and unconditionally
waives and agrees,  to the fullest  extent  permitted  by law,  not to plead any
objection  that it may now or  hereafter  have to the  laying  of  venue  or the
convenience  of the forum of any action or claim with respect to this  Agreement
or the transactions contemplated thereby brought in the courts aforesaid.

     11.17. Knowledge of a Party.  References in this Agreement to the knowledge
of a party  shall mean the  knowledge  possessed  by any of such  parties or the
present  executive  officers  of  such  party  including,   without  limitation,
information which is or has been in the books and records of such party.

     11.18. Binding Agreement.  This Agreement shall be binding upon the parties
and their respective successors and assigns.











                                      A-46

<PAGE>



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                             ZIONS BANCORPORATION

Attest:                                      By:
       -----------------------------------        ------------------------------
                                                          Dale M. Gibbons
                                                    Executive Vice President and
                                                       Chief Financial Officer

                                             VAL COR BANCORPORATION, INC.

Attest:                                      By:
       -----------------------------------        ------------------------------

                  Ray L. Nash                             Gary S. Judd
      Chief Financial Officer and Secretary            President and Chief
                                                        Executive Officer

                                             BANK COLORADO, NATIONAL ASSOCIATION

Attest:                                      By:
       -----------------------------------        ------------------------------
                  Ray L. Nash                              Gary S. Judd
      Chief Financial Officer and Secretary             President and Chief
                                                         Executive Officer




                                      A-47


<PAGE>



                                             MOUNTAIN FINANCIAL HOLDING COMPANY

Attest:                                      By:
       -----------------------------------        ------------------------------
                                                        James P. Oaks
                                                      President and Chief
                                                       Executive Officer

                                             MOUNTAIN NATIONAL BANK

Attest:                                      By:
       -----------------------------------        ------------------------------
                                                        James P. Oaks
                                                      President and Chief
                                                       Executive Officer



                                      A-48

<PAGE>



- -------------------------------------------------------- )
State of Utah                                            )
                                                         )       ss.

County of Salt Lake                                      )
                                                         )
- -------------------------------------------------------- )

     On this  14th day of May,  1998,  before  me  personally  appeared  Dale M.
Gibbons,  to me known to be the Executive  Vice  President  and Chief  Financial
Officer of Zions Bancorporation, and acknowledged said instrument to be the free
and  voluntary  act and deed of said  corporation,  for the  uses  and  purposes
therein  mentioned,  and on oath stated that he was  authorized  to execute said
instrument and that the seal affixed is the corporate seal of said corporation.

     In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.



                                                  ------------------------------
                                                           Notary Public














                                      A-49

<PAGE>



- -------------------------------------------------------- )
                                                         )
State of Colorado                                        )
                                                         )       ss.
County of Denver                                         )
                                                         )
- -------------------------------------------------------- )

     On this 14th day of May, 1998, before me personally  appeared Gary S. Judd,
to me known to be the President and Chief  Executive  Officer of each of Val Cor
Bancorporation,  Inc. and Bank Colorado, National Association,  and acknowledged
said  instrument  to be the  free  and  voluntary  act and  deed of each of said
corporations,  for the uses and  purposes  therein  mentioned,  and on oath each
stated that he was authorized to execute said instrument and that the respective
seals affixed are the respective corporate seals of said corporations.

     In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.


                                                  ------------------------------
                                                           Notary Public












                                      A-50

<PAGE>




- -------------------------------------------------------- )
                                                         )
State of Colorado                                        )
                                                         )       ss.
County of Teller                                         )
                                                         )
- -------------------------------------------------------- )

     On this 14th day of May, 1998, before me personally appeared James P. Oaks,
to me  known  to be the  President  and  Chief  Executive  Officer  of  Mountain
Financial  Holding  Company and the  President  and Chief  Executive  Officer of
Mountain  National Bank,  and  acknowledged  said  instrument to be the free and
voluntary act and deed of each of said  corporations,  for the uses and purposes
therein  mentioned,  and on oath stated that he was  authorized  to execute said
instrument and that the seals affixed are the respective corporate seals of said
corporations.

     In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.




                                                  ------------------------------
                                                           Notary Public








                                      A-51

<PAGE>



     The  undersigned  members of the Board of Directors  of Mountain  Financial
Holding Company (the "Company"), acknowledging that Zions Bancorporation ("Zions
Bancorp") has relied upon the action  heretofore taken by the board of directors
in entering into the Agreement,  and has required the same as a prerequisite  to
Zions  Bancorp's  execution of the  Agreement,  do  individually  and as a group
agree,  subject  to their  fiduciary  duties to  shareholders,  to  support  the
Agreement  and to  recommend  its  adoption  by the  other  shareholders  of the
Company.

     The undersigned do hereby, individually and as a group, until the Effective
Date or termination of the Agreement,  further agree to refrain from  soliciting
or, subject to their fiduciary duties to shareholders,  negotiating or accepting
any offer of merger,  consolidation,  or acquisition of any of the shares or all
or substantially all of the assets of the Company or Mountain National Bank.




- ---------------------------------            ----------------------------------
         Dale L. Duncan                                Daniel W. Duncan 
                                                                        

 ---------------------------------            ----------------------------------
        Raymond A. Giersch                            Peter C. Kuyper  
                                                                        

- ---------------------------------            ----------------------------------
        Charles A. Oaks                               James P. Oaks    
                                                                        

 ---------------------------------            ----------------------------------
       Richard L. Smith                               Howard Stull     
                                                                        

 ---------------------------------            ----------------------------------
       Russell M. Wiley                               Dana E. Duncan   
                                                                        






                                      A-52

<PAGE>




                                  SCHEDULE 1.8
                                  ------------

                                   Dale Duncan
                                   George Mead
                                 Charles A Oaks
                                  James P. Oaks
                                Daniel W. Duncan
                               Raymond A. Giersch
                                 Peter C. Kuyper
                                Richard L. Smith
                                  Howard Stull
                                Russell M. Wiley
                                 Dana E. Duncan









                                      A-53

<PAGE>


                                   APPENDIX B

                       COLORADO BUSINESS CORPORATION ACT
                          RIGHTS OF DISSENTING OWNERS

     7-113-101 DEFINITIONS.--For purposes of this article:

     1. "Beneficial  shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.

     2. "Corporation"  means the issuer of the shares held by a dissenter before
the  corporate  action,  or the  surviving  or  acquiring  domestic  or  foreign
corporation, by merger or share exchange of that issuer.

     3.  "Dissenter"  means  a  shareholder  who is  entitled  to  dissent  from
corporate  action under section  7-113-102  and who exercises  that right at the
time and in the manner required by part 2 of this article.

     4. "Fair value", with respect to a dissenter's  shares,  means the value of
the shares  immediately  before the effective  date of the  corporate  action to
which the dissenter  objects,  excluding any  appreciation  or  depreciation  in
anticipation  of the corporate  action except to the extent that exclusion would
be inequitable.

     5.  "Interest"  means  interest  from the  effective  date of the corporate
action  until the date of payment,  at the average  rate  currently  paid by the
corporation  on its  principal  bank  loans  or, if none,  at the legal  rate as
specified in section 5-12-101, C.R.S.

     6.  "Record  shareholder"  means  the  person  in  whose  name  shares  are
registered in the records of a  corporation  or the  beneficial  owner of shares
that are  registered  in the  name of a  nominee  to the  extent  such  owner is
recognized  by the  corporation  as  the  shareholder  as  provided  in  section
7-107-204.

     7.  "Shareholder"  means  either  a  record  shareholder  or  a  beneficial
shareholder.

     7-113-102 RIGHT TO DISSENT.-- 1. A shareholder,  whether or not entitled to
vote,  is  entitled  to  dissent  and  obtain  payment  of the fair value of the
shareholder's shares in the event of any of the following corporate actions:

     (a)  Consummation  of a plan of merger to which the  corporation is a party
if: f:

          (I)  Approval by the  shareholders of that corporation is required for
               the merger by section  7-111-103  or 7-111-104 or by the articles
               of incorporation; or

                                      B-1


<PAGE>



          (II) The  corporation  is a subsidiary  that is merged with its parent
               corporation under section 7-111-104;

     (b)  Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;

     (c) Consummation of a sale, lease,  exchange,  or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102(1); and

     (d) Consummation of a sale, lease,  exchange,  or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition under section 7-112-102(2).

     1.3. A  shareholder  is not entitled to dissent and obtain  payment,  under
subsection (1) of this section,  of the fair value of the shares of any class or
series of shares  which  either  were listed on a national  securities  exchange
registered under the federal "Securities Exchange Act of 1934", as amended or on
the national  market system of the national  association  of securities  dealers
automated  quotation  system,  or were held of record by more than two  thousand
shareholders, at the time of:

     (a) The  record  date  fixed  under  section  7-107-107  to  determine  the
shareholders  entitled to receive notice of the  shareholders'  meeting at which
the corporate action is submitted to a vote;

     (b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or

     (c) The effective date of the corporate  action if the corporate  action is
authorized other than by a vote of shareholders.

     1.8. The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares,  pursuant to
the corporate action, anything except:

     (a) Shares of the  corporation  surviving the  consummation  of the plan of
merger or share exchange;

     (b) Shares of any other corporation which at the effective date of the plan
of merger or share  exchange  either  will be  listed on a  national  securities
exchange  registered  under the federal  "Securities  Exchange Act of 1934",  as
amended,  or on the  national  market  system  of the  National  Association  of
Securities Dealers Automated Quotation System, or will be held of record by more
than two thousand shareholders;

                                      B-2


<PAGE>



     (c) Cash in lieu of fractional shares; or

     (d) Any  combination of the foregoing  described  shares or cash in lieu of
fractional shares.

     2.5. A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
a reverse split that reduces the number of shares owned by the  shareholder to a
fraction of a share or to scrip if the  fractional  share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.

     3. A  shareholder  is entitled  to dissent  and obtain  payment of the fair
value of the  shareholder's  shares in the event of any corporate  action to the
extent provided by the bylaws or a resolution of the board of directors.

     4.  A  shareholder   entitled  to  dissent  and  obtain   payment  for  the
shareholder's  shares under this article may not challenge the corporate  action
creating  such  entitlement  unless the action is  unlawful or  fraudulent  with
respect to the shareholder or the corporation.

     7-113-103  DISSENT  BY  NOMINEES  AND  BENEFICIAL   OWNERS.--1.   A  record
shareholder  may  assert  dissenters'  rights  as to fewer  than all the  shares
registered  in the  record  shareholder's  name only if the  record  shareholder
dissents  with  respect to all shares  beneficially  owned by any one person and
causes the  corporation to receive  written notice which states such dissent and
the name, address, and federal taxpayer  identification  number, if any, of each
person on whose behalf the record shareholder  asserts  dissenters'  rights. The
rights of a record  shareholder  under this  subsection (1) are determined as if
the shares as to which the record  shareholder  dissents and the other shares of
the record shareholder were registered in the names of different shareholders.

     2. A beneficial  shareholder may assert dissenters' rights as to the shares
held on the beneficial shareholder's behalf only if:

     (a) The beneficial shareholder causes the corporation to receive the record
shareholder's  written  consent  to the  dissent  not  later  than  the time the
beneficial shareholder asserts dissenters' rights; and

     (b)  The  beneficial  shareholder  dissents  with  respect  to  all  shares
beneficially owned by the beneficial shareholder.

     3. The  corporation may require that,  when a record  shareholder  dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial  shareholder must certify to the corporation that the beneficial
shareholder and the record

                                      B-3


<PAGE>



shareholder  or record  shareholders  of all shares  owned  beneficially  by the
beneficial shareholder have asserted, or will timely assert,  dissenters' rights
as to all such  shares as to which  there is no  limitation  on the  ability  to
exercise  dissenters'  rights.  Any  such  requirement  shall be  stated  in the
dissenters' notice given pursuant to section 7- l 13-203.

     7-113-201 NOTICE OF DISSENTERS' RIGHTS.--1.  If a proposed corporate action
creating  dissenters' rights under section 7-113-102 is submitted to a vote at a
shareholders'  meeting,  the  notice  of  the  meeting  shall  be  given  to all
shareholders,  whether or not  entitled  to vote.  The notice  shall  state that
shareholders  are or may be entitled  to assert  dissenters'  rights  under this
article and shall be accompanied by a copy of this article and the materials, if
any, that,  under articles 101 to 117 of this title, are required to be given to
shareholders entitled to vote on the proposed action at the meeting.  Failure to
give notice as provided by this subsection (1) shall not affect any action taken
at the  shareholders'  meeting for which the notice was to have been given,  but
any  shareholder  who was  entitled to dissent but who was not given such notice
shall not be precluded from demanding payment for the shareholder's shares under
this  article  by  reason  of the  shareholder's  failure  to  comply  with  the
provisions of section 7-113-202(1).

     2. If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized  without a meeting of  shareholders  pursuant to section
7-107-104,  any  written  or oral  solicitation  of a  shareholder  to execute a
writing  consenting to such action  contemplated  in section  7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters'  rights under this article,  by a copy of this
article,  and by the materials,  if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders  entitled to vote on
the  proposed  action  if the  proposed  action  were  submitted  to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken  pursuant to section  7-107-104  for which the
notice was to have been given,  but any  shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding  payment
for the  shareholder's  shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(2).

     7-113-202 NOTICE OF INTENT TO DEMAND  PAYMENT.--1.  If a proposed corporate
action  creating  dissenters'  rights under section  7-113-102 is submitted to a
vote at a  shareholders'  meeting and if notice of  dissenters'  rights has been
given to such  shareholder  in  connection  with the action  pursuant to section
7-113-201 (1), a shareholder who wishes to assert dissenters' rights shall:

     (a) Cause the  corporation  to receive,  before the vote is taken,  written
notice of the  shareholder's  intention to demand payment for the  shareholder's
shares if the proposed corporate action is effectuated; and

     (b) Not vote the shares in favor of the proposed corporate action.


                                      B-4

<PAGE>



     2. If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized  without a meeting of  shareholders  pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such shareholder
in connection  with the action  pursuant to .section  7-113-201(2) a shareholder
who wishes to assert  dissenters'  rights shall not execute a writing consenting
to the proposed corporate action.

     3. A shareholder who does not satisfy the requirements of subsection (1) or
(2) of this  section is not  entitled to demand  payment  for the  shareholder's
shares under this article.

     7-113-203 DISSENTERS'  NOTICE.--1.  If a proposed corporate action creating
dissenters' rights under section 7-113-102 is authorized,  the corporation shall
give a written dissenters' notice to all shareholders who are entitled to demand
payment for their shares under this article.

     2. The dissenters'  notice required by subsection (1) of this section shall
be given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:

          (a) State  that the  corporate  action  was  authorized  and state the
effective date or proposed effective date of the corporate action;

          (b) State an address at which the  corporation  will  receive  payment
demands and the address of a place where  certificates for  certificated  shares
must be deposited;

          (c) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;

          (d) Supply a form for  demanding  payment,  which form shall request a
dissenter to state an address to which payment is to be made;

          (e) Set the date by which the  corporation  must  receive  the payment
demand and certificates for  certificated  shares,  which date shall not be less
than thirty days after the date the notice  required by  subsection  (1) of this
section is given;

          (f) State the  requirement  contemplated in section  7-113-103(3),  if
such requirement is imposed; and

          (g) Be accompanied by a copy of this article.

     7-113-204  PROCEDURE TO DEMAND  PAYMENT.--1.  A shareholder  who is given a
dissenters'  notice  pursuant  to  section  7-113-203  and who  wishes to assert
dissenters'  rights  shall,  in  accordance  with the  terms of the  dissenters'
notice:

                                       B-5


<PAGE>



          (a) Cause the  corporation to receive a payment  demand,  which may be
the  payment  demand  form  contemplated  in  section  7-113-  203(2)(d),   duly
completed, or may be stated in another writing; and

          (b) Deposit the shareholder's certificates for certificated shares.

     2. A shareholder  who demands  payment in accordance with subsection (1) of
this section  retains all rights of a shareholder,  except the right to transfer
the shares,  until the effective  date of the proposed  corporate  action giving
rise to the shareholder's  exercise of dissenters' rights and has only the right
to receive  payment for the shares after the  effective  date of such  corporate
action.

     3. Except as provided in section 7-113-207 or  7-113-209(1)(b),  the demand
for payment and deposit of certificates are irrevocable.

     4. A shareholder who does not demand payment and deposit the  shareholder's
share  certificates  as  required  by the date or dates  set in the  dissenters'
notice is not entitled to payment for the shares under this article.

     7-113-205 UNCERTIFICATED  SHARES.--1.  Upon receipt of a demand for payment
under section 7-113-204 from a shareholder holding uncertificated shares, and in
lieu of the deposit of certificates representing the shares, the corporation may
restrict the transfer thereof.

     2. In all other  respects,  the  provisions of section  7-113-204  shall be
applicable to shareholders who own uncertificated shares.

     7-113-206  PAYMENT.--1.  Except as provided in section 7-113-208,  upon the
effective date of the corporate action creating dissenters' rights under section
7-113-102 or upon  receipt of a payment  demand  pursuant to section  7-113-204,
whichever is later,  the corporation  shall pay each dissenter who complied with
section  7-113-204,  at the address stated in the payment demand,  or if no such
address  is  stated  in  the  payment  demand,  at  the  address  shown  on  the
corporation's  current record of shareholders for the record shareholder holding
the  dissenter's  shares,  the amount the  corporation  estimates to be the fair
value of the dissenter's shares, plus accrued interest.

     2. The payment made  pursuant to  subsection  (1) of this section  shall be
accompanied by:

     (a) The corporation's balance sheet as of the end of its most recent fiscal
year or, if that is not available, the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the date of payment,
an income statement for that year, and, if the corporation  customarily provides
such statements to shareholders,  a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year,  which  balance  sheet
and statements shall have been audited if the corporation  customarily  provides
audited financial

                                      B-6


<PAGE>



statements  to  shareholders,   as  well  as  the  latest  available   financial
statements,  if any,  for the  interim  or  full-year  period,  which  financial
statements need not be audited;

     (b) A  statement  of the  corporation's  estimate  of the fair value of the
shares;

     (c) An explanation of how the interest was calculated;

     (d) A statement of the  dissenter's  right to demand  payment under section
7-113-209;

    and

     (e) A copy of this article.

     7-113-207  FAILURE  TO  TAKE  ACTION.--1.  If  the  effective  date  of the
corporate action creating  dissenters'  rights under section  7-113-102 does not
occur  within  sixty  days  after the date set by the  corporation  by which the
corporation  must receive the payment  demand as provided in section  7-113-203,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.

     2. If the  effective  date of the  corporate  action  creating  dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the  corporation  by which the  corporation  must receive the payment  demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice,  as  provided  in section  7-113-203,  and the  provisions  of  sections
7-113-204 to 7-113-209 shall again be applicable.

     7-113-208 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT
OF  PROPOSED  CORPORATE  ACTION.--1.   The  corporation  may,  in  or  with  the
dissenters'  notice given pursuant to section  7-113-203,  state the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action creating  dissenters'  rights under section 7-113-102 and state
that the dissenter shall certify in writing,  in or with the dissenter's payment
demand under section  7-113-204,  whether or not the dissenter (or the person on
whose behalf dissenters' rights are asserted) acquired  beneficial  ownership of
the shares  before  that date.  With  respect to any  dissenter  who does not so
certify in writing,  in or with the payment  demand,  that the  dissenter or the
person  on whose  behalf  the  dissenter  asserts  dissenters'  rights  acquired
beneficial  ownership of the shares before such date,  the  corporation  may, in
lieu of making the  payment  provided in section  7-113-206,  offer to make such
payment if the dissenter agrees to accept it in full satisfaction of the demand.

     2. An offer to make payment  under  subsection  (1) of this  section  shall
include or be accompanied by the information required by section 7-113-206(2).

     7-113-209 PROCEDURE IF DISSENTER/IS DISSATISFIED WITH PAYMENT OR OFFER.--1.
A dissenter  may give notice to the  corporation  in writing of the  dissenter's
estimate  of the fair  value of the  dissenter's  shares  and of the  amount  of
interest due and may

                                      B-7


<PAGE>



demand payment of such estimate,  less any payment made under section 7-113-206,
or reject the corporation's offer under section 7-113- 208 and demand payment of
the fair value of the shares and interest due, if:

     (a) The dissenter  believes that the amount paid under section 7-113-206 or
offered  under  section  7-113-208  is less than the fair value of the shares or
that the interest due was incorrectly calculated;

     (b) The corporation  fails to make payment under section  7-113-206  within
sixty days after the date set by the corporation by which the  corporation  must
receive the payment demand; or

     (c) The corporation  does not return the deposited  certificates or release
the  transfer  restrictions  imposed on  uncertificated  shares as  required  by
section 7-113-207(1).

     2. A dissenter waives the right to demand payment under this section unless
the  dissenter  causes  the  corporation  to  receive  the  notice  required  by
subsection (1) of this section within thirty days after the corporation  made or
offered payment for the dissenter's shares.

     7-113-301 COURT ACTION.--1. If a demand for payment under section 7-113-209
remains  unresolved,  the corporation may, within sixty days after receiving the
payment  demand,  commence a proceeding  and petition the court to determine the
fair value of the shares  and  accrued  interest.  If the  corporation  does not
commence  the  proceeding  within  the  sixty-day  period,  it shall pay to each
dissenter whose demand remains unresolved the amount demanded.

     2. The  corporation  shall commence the proceeding  described in subsection
(1) of this section in the district  court of the county in this state where the
corporation's  principal  office  is  located  or,  if  the  corporation  has no
principal office in this state, in the district court of the county in which its
registered  office is  located.  If the  corporation  is a  foreign  corporation
without a registered  office,  it shall  commence the  proceeding  in the county
where the registered  office of the domestic  corporation  merged into, or whose
shares were acquired by, the foreign corporation was located.

     3. The corporation  shall make all dissenters,  whether or not residents of
this state, whose demands remain unresolved parties to the proceeding  commenced
under  subsection (2) of this section as in an action against their shares,  and
all  parties  shall  be  served  with a copy of the  petition.  Service  on each
dissenter  shall be by  registered or certified  mail, to the address  stated in
such dissenter's  payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record  shareholder  holding the dissenter's  shares,  or as provided by
law.

     4. The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and  exclusive.  The court may appoint
one or more persons as appraisers  to receive  evidence and recommend a decision
on the question of fair

                                      B-8


<PAGE>



value. The appraisers have the powers described in the order appointing them, or
in any amendment to such order.  The parties to the  proceeding  are entitled to
the same discovery rights as parties in other civil proceedings.

     5. Each dissenter made a party to the proceeding commenced under subsection
(2) of this section is entitled to judgment for the amount, if any, by which the
court finds the fair value of the dissenter's shares, plus interest, exceeds the
amount paid by the  corporation,  or for the fair value,  plus interest,  of the
dissenter's  shares for which the corporation  elected to withhold payment under
section 7-113- 208.

     7-113-302  COURT  COSTS AND  COUNSEL  FEES.--1.  The court in an  appraisal
proceeding  commenced  under Section  7-113-30l shall determine all costs of the
proceeding,  including the  reasonable  compensation  and expenses of appraisers
appointed  by  the  court.   The  court  shall  assess  the  costs  against  the
corporation;  except that the court may assess costs  against all or some of the
dissenters,  in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under section 7-113-209.

     2. The court may also  assess the fees and  expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:

     (a) Against the  corporation  and in favor of any  dissenters  if the court
finds the corporation did not substantially comply with the requirements of part
2 of this article; or

     (b) Against either the corporation or one or more  dissenters,  in favor of
any other  party,  if the court finds that the party  against  whom the fees and
expenses are assessed acted arbitrarily,  vexatiously, or not in good faith with
respect to the rights provided by this article.

     3. If the court finds that the services of counsel for any  dissenter  were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel  reasonable  fees to be paid out of the amounts awarded to
the dissenters who were benefitted.

                                      B-9


<PAGE>



                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Utah law provides for indemnification of directors and officers as follows:

16-10a-902 AUTHORITY TO INDEMNIFY DIRECTORS.

     (1) Except as provided in Subsection  (4), a  corporation  may indemnify an
individual made a party to a proceeding because he is or was a director, against
liability incurred in the proceeding if:

     (a) his conduct was in good faith; and

     (b) he reasonably  believed that his conduct was in, or not opposed to, the
corporation's best interests; and

     (c) in the case of any criminal  proceeding,  he had no reasonable cause to
believe his conduct was unlawful.

     (2) A director's  conduct  with respect to any employee  benefit plan for a
purpose he  reasonably  believed to be in or not opposed to the interests of the
participants  in and  beneficiaries  of the plan is conduct that  satisfies  the
requirement of Subsection (1)(b).

     (3)  The  termination  of a  proceeding  by  judgment,  order,  settlement,
conviction,  or upon a plea of nolo  contendere  or its  equivalent  is not,  of
itself,  determinative  that the  director  did not meet the standard of conduct
described in this section.

     (4) A corporation may not indemnify a director under this section:

     (a) in connection  with a proceeding by or in the right of the  corporation
in which the director was adjudged liable to the corporation; or

     (b) in  connection  with any other  proceeding  charging  that the director
derived an improper  personal  benefit,  whether or not involving  action in his
official capacity,  in which proceeding he was adjudged liable on the basis that
he derived an improper personal benefit.

     (5)  Indemnification  permitted  under this  section in  connection  with a
proceeding  by or in the  right of the  corporation  is  limited  to  reasonable
expenses incurred in connection with the proceeding.

16-10a-903 MANDATORY INDEMNIFICATION OF DIRECTORS.

     Unless  limited by its  articles  of  incorporation,  a  corporation  shall
indemnify a director  who was  successful,  on the merits or  otherwise,  in the
defense of any proceeding,  or in the defense of any claim,  issue, or matter in
the  proceeding,  to which he was a party because he is or was a director of the
corporation,  against reasonable expenses incurred by him in connection with the
proceeding or claim with respect to which he has been successful.

                                      II-1


<PAGE>



16-10a-907  INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.

     Unless a corporation's articles of incorporation provide otherwise:

     (1) an officer of the corporation is entitled to mandatory  indemnification
under  Section   16-10a-903,   and  is  entitled  to  apply  for   court-ordered
indemnification  under Section 16-10a-905,  in each case to the same extent as a
director;

     (2) the  corporation  may  indemnify  and  advance  expenses to an officer,
employee,  fiduciary,  or agent of the  corporation  to the same  extent as to a
director; and

     (3) a corporation  may also  indemnify and advance  expenses to an officer,
employee,  fiduciary, or agent who is not a director to a greater extent, if not
inconsistent  with  public  policy,  and if  provided  for by  its  articles  of
incorporation,  bylaws, general or specific action of its board of directors, or
contract.

16-10a-908 INSURANCE.

     A corporation may purchase and maintain liability  insurance on behalf of a
person who is or was a director,  officer, employee,  fiduciary, or agent of the
corporation, or who, while serving as a director, officer, employee,  fiduciary,
or agent of the corporation, is or was serving at the request of the corporation
as a director,  officer,  partner,  trustee,  employee,  fiduciary,  or agent of
another  foreign or  domestic  corporation  or other  person,  or of an employee
benefit  plan,  against  liability  asserted  against or incurred by him in that
capacity or arising from his status as a director, officer, employee, fiduciary,
or agent,  whether or not the  corporation  would have  power to  indemnify  him
against the same liability under Sections 16-10a-902, 16-10a-903, or 16-10a-907.
Insurance may be procured from any insurance company  designated by the board of
directors,  whether the insurance company is formed under the laws of this state
or any other  jurisdiction  of the United  States or  elsewhere,  including  any
insurance  company in which the  corporation has an equity or any other interest
through stock ownership or otherwise.

16-10a-909 LIMITATIONS OF INDEMNIFICATION OF DIRECTORS.

     (1) A provision treating a corporation's indemnification of, or advance for
expenses to,  directors  that is contained in its articles of  incorporation  or
bylaws,  in a resolution  of its  shareholders  or board of  directors,  or in a
contract (except an insurance policy) or otherwise,  is valid only if and to the
extent the  provision  is not  inconsistent  with this part.  If the articles of
incorporation limit indemnification or advance or' expenses, indemnification and
advance of  expenses  are valid only to the  extent  not  inconsistent  with the
articles of incorporation.

     (2) This  part  does not limit a  corporation's  power to pay or  reimburse
expenses incurred by a director in connection with the director's  appearance as
a witness in a proceeding  at a time when the director has not been made a named
defendant or respondent to the proceeding.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

     (a) Exhibits.  An Exhibit  Index,  containing a list of all exhibits  filed
with this Registration Statement, is included beginning on page II-7.

     (b) Financial Statement Schedules. Not applicable.

     (c) Report, Opinion or Appraisal. Not applicable.

                                      11-2


<PAGE>



ITEM 22. UNDERTAKINGS.

     The undersigned registrant hereby undertakes as follows:

     (1) that,  for purposes of determining  any liability  under the Securities
Act of 1933, each filing of the  registrant's  annual report pursuant to Section
13(a)  or  Section  15(d)  of the  Securities  Exchange  Act  of  1934  that  is
incorporated by reference in the registration  statement shall be deemed to be a
new registration  statement relating to the securities offered therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (2) to deliver or cause to be delivered with the prospectus, to each person
to whom the  prospectus  is sent or given,  the latest annual report to security
holders  that is  incorporated  by  reference in the  prospectus  and  furnished
pursuant to and meeting the  requirements  of Rule 14a-3 or Rule 14c-3 under the
Securities  Exchange  Act of 1934;  and,  where  interim  financial  information
required to be presented by Article 3 of Regulation  S-X is not set forth in the
prospectus,  to  deliver,  or cause to be  delivered  to each person to whom the
prospectus is sent or given,  the latest  quarterly  report that is specifically
incorporated  by reference in the  prospectus to provide such interim  financial
information.

     (3) that  prior  to any  public  reoffering  of the  securities  registered
hereunder  through the use of a prospectus which is a part of this  registration
statement,  by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), such reoffering  prospectus will contain the information
called for by the  applicable  registration  form with respect to reofferings by
persons who may be deemed  underwriters,  in addition to the information  called
for by the other items of the applicable form.

     (4) that every  prospectus  (i) that is filed  pursuant  to  paragraph  (3)
immediately preceding, or (ii) that purports to meet the requirements of Section
l0(a)(3) of the  Securities  Act of 1933, as amended,  and is used in connection
with an offering of  securities  subject to Rule 415, will be filed as a part of
an  amendment  to the  registration  statement  and will not be used  until such
amendment is  effective,  and that,  for purposes of  determining  any liability
under the Securities Act of 1933,  each such  post-effective  amendment shall be
deemed to be a new  registration  statement  relating to the securities  offered
therein,  and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

     (5) that  insofar as  indemnification  for  liabilities  arising  under the
Securities Act of 1933 may be permitted to directors,  officers and  controlling
persons of the  registrant  pursuant to the provisions  described  under Item 20
above, or otherwise,  the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is,  therefore,  unenforceable.  In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the  registrant  of  expenses  incurred  or  paid  by  a  director,  officer  or
controlling  person of the registrant in the  successful  defense of any action,
suit or proceeding) is asserted by such director,  officer or controlling person
in connection with the securities being registered,  the registrant will, unless
in the  opinion  of its  counsel  the matter  has been  settled  by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

     (6) to  respond  to  requests  for  information  that  is  incorporated  by
reference into the Proxy Statement/Prospectus  pursuant to Items 4, 10(b), 11 or
13 of Form S-4, within one business day of receipt of such request,  and to send
the  incorporated  documents by first class mail or other equally  prompt means.
This  includes  information  contained  in  documents  tiled  subsequent  to the
Effective Date of the registration  statement  through the date of responding to
the request.

                                      II-3


<PAGE>



     (7) to  supply  by  means of a  post-effective  amendment  all  information
concerning a transaction,  and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.

     (8) to file,  during any period in which  offers or sales are being made, a
post-effective amendment to this registration statement:

     (i)  to  include  any  prospectus  required  by  Section  10(a)(3)  of  the
Securities Act of 1933;

     (ii) to reflect in the  prospectus  any facts or events  arising  after the
effective date of the registration  statement (or the most recent post-effective
amendment  thereof)  which,  individually  or  in  the  aggregate,  represent  a
fundamental change in the information set forth in the registration statement.

     (iii) to  include  any  material  information  with  respect to the plan of
distribution  not  previously  disclosed  in the  registration  statement or any
material change to such information in the registration statement.

     (9) that, for the purpose of determining any liability under the Securities
Act of 1933,  each  such  post-effective  amendment  shall be deemed to be a new
registration  statement  relating to the  securities  offered  therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (10) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.


                                      II-4

<PAGE>



                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the registrant
has duly caused this  registration  statement  to be signed on its behalf by the
undersigned, thereunto duly authorized, in Salt Lake City, Utah, on the 16th day
of September, 1998.

                                        Zions Bancorporation

                                        By:  /s/Harris H. Simmons
                                           ------------------------------------
                                             Harris H. Simmons, President and 
                                             Chief Executive Officer

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below  constitutes and appoints Harris H. Simmons,  Roy W. Simmons,  and Dale M.
Gibbons,  and each of them,  his true and lawful  attorneys-in-fact  and agents,
with full power of  substitution  and  resubstitution,  for him and in his name,
place  and  stead,  in any and all  capacities,  to sign any and all  amendments
(including  post-effective  amendments) to this registration  statement,  and to
file the same,  with all exhibits  thereto,  and other  documents in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agents,  and each of them, full power and authority to do
and perform each and every act and thing  requisite and necessary to be done, as
fully to all  intents  and  purposes  as he might or could do in person,  hereby
ratifying and confirming all that said attorneys-in-fact and agents or either of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
thereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                                      Capacity                             Date
- ---------                                      --------                             ----

<S>                                <C>                                       <C> 
/s/Harris H. Simmons               President, Chief Executive                September 16, 1998
- ---------------------              Officer and Director
Harris H. Simmons

/s/Dale M. Gibbons                 Executive Vice President                  September 16, 1998
- ---------------------              and Chief Financial Officer
Dale M. Gibbons

/s/Nolan X. Bellon                 Senior Vice President                     September 16, 1998
- ---------------------              and Controller
Nolan X. Bellon                    

/s/Roy W. Simmons                  Chairman and Director                     September 16, 1998
- ---------------------                                   
Roy W. Simmons
</TABLE>





                                      II-5


<PAGE>


<TABLE>

<S>                                <C>                                       <C>  
/s/Jerry C. Atkin                  Director                                  September 16, 1998
- ----------------------
Jerry C. Atkin


/s/R.D. Cash                       Director                                  September 16, 1998
- ----------------------
R. D. Cash


/s/L.E. Simmons                    Director                                  September 16, 1998
- ----------------------
L. E. Simmons


/s/Grant R. Caldwell               Director                                  September 16, 1998
- ----------------------
Grant R. Caldwell


/s/I.J. Wagner                     Director                                  September 16, 1998
- ----------------------
I.J. Wagner


/s/Roger B. Porter                 Director                                  September 16, 1998
- ----------------------
Roger B. Porter


/s/Richard H. Madsen               Director                                  September 16, 1998
- ----------------------
Richard H. Madsen


/s/Robert G. Sarver                Director                                  September 16, 1998
- ----------------------
Robert G. Sarver
</TABLE>


                                      11-6


<PAGE>



                                 EXHIBIT INDEX

                    (Pursuant to Item 601 of Regulation S-K)
<TABLE>
<CAPTION>

                                                                                      Page Number
                                                                                    in Sequential
Exhibit                                                                                 Numbering
  No.                  Description and Method of Filing                                    System
  ---                  --------------------------------                                    ------
<S>     <C>                                                                       <C>

2.1       Agreement  and Plan of  Reorganization  dated as of May 14, 1998 among
          Zions  Bancorporation,  Val Cor  Bancorporation,  Inc., Bank Colorado,
          National Association,  Mountain Financial Holding Company and Mountain
          National Bank (included in the Proxy  Statement/Prospectus as Appendix
          A;  Exhibits  I,  II,  III,  VII and IX to the  Agreement  and Plan of
          Reorganization are filed herewith)

3.1       Restated  Articles  of  Incorporation  of Zions  Bancorporation  dated          *
          November  8,  1993,   and  filed  with  the   Department  of  Business
          Regulation,  Division of Corporations of the State of Utah on November
          9, 1993  (incorporated by reference to Exhibit 3.1 to the Registrant's
          Form S-4 Registration Statement,  File No. 33-51145, filed on November
          22, 1993)

3.2       Restated  Bylaws  of Zions  Bancorporation,  dated  November  8,  1993          *
          (incorporated by reference to Exhibit 3.2 to the Registrant's Form S-4
          Registration Statement, File No. 33- 51145, filed November 22, 1993)

3.3       Articles of  Amendment to the Restated  Articles of  Incorporation  of          *
          Zions   Bancorporation  dated  April  30,  1997  and  filed  with  the
          Department of Business  Regulation,  Division of  Corporations  of the
          State of Utah on May 2, 1997 (incorporated by reference to Exhibit 3.1
          of  Zions  Bancorporation's  Quarterly  Report  on Form  10-Q  for the
          quarter ended June 30, 1997, File No. 0-2610)

3.4       Articles of  Amendment to the Restated  Articles of  Incorporation  of          *
          Zions  Bancorporation  dated  April  24,  1998,  and  filed  with  the
          Department of Business  Regulation.  Division of  Corporations  of the
          State of Utah on April 27, 1998  (incorporated by reference to Exhibit
          3 of Zions  Bancorporation's  Quarterly  Report  on Form  10-Q for the
          quarter ended June 30, 1998, File No. 0-2610)

4         Shareholder  Protection  Rights  Agreement,  dated as of September 27,          *
          1996,  between Zions  Bancorporation  and Zions First National Bank as
          Rights  Agent   (incorporated   by  reference  to  Exhibit  1  to  the
          Registrant's Form 8-K, filed October 12, 1996)

5         Opinion of Duane, Morris & Heckscher LLP regarding the

                                      II-7



<PAGE>


<CAPTION>

          legality  of the  shares  of  Common  Stock  being  registered  (filed
          herewith)

8         Opinion of Duane,  Morris & Heckscher LLP regarding tax matters (filed
          herewith)

10.1      Amended and Restated Zions  Bancorporation  Pension Plan (incorporated          *
          by reference to Exhibit 10.1 of Zions  Bancorporation's  Annual Report
          on Form 10-K for the year ended December 31, 1994, File No. 0-2610)

10.2      Amendment to Zions  Bancorporation  Pension Plan effective December 1,          *
          1994   (incorporated   by   reference   to   Exhibit   10.2  of  Zions
          Bancorporation's  Annual  Report  on  Form  10-K  for the  year  ended
          December 31, 1994, File No. 0-2610)

10.3      Zions   Utah   Bancorporation   Supplemental   Retirement   Plan  Form          *
          (incorporated   by   reference   to   Exhibit   19.4  of  Zions   Utah
          Bancorporation's  Quarterly  Report on Form 10-Q for the quarter ended
          September 30, 1985, File No. 0-2610)

10.4      Zions Utah  Bancorporation  Key Employee  Incentive  Stock Option Plan          *
          approved  by the  shareholders  of  the  Company  on  April  28,  1982
          (incorporated  by reference to Exhibit 10.1 of Zions  Bancorporation's
          Quarterly  Report on Form 10-Q for the  quarter  ended June 30,  1995,
          File No. 0-2610)

10.5      Amendment No. 1 to Zions  Bancorporation  Key Employee Incentive Stock          *
          Option Plan approved by the  shareholders  of the Company on April 27,
          1990   (incorporated   by   reference   to   Exhibit   10.2  of  Zions
          Bancorporation's  Quarterly  Report on Form 10-Q for the quarter ended
          June 30, 1995. File No. 0-2610)

10.6      Amendment No. 2 to Zions  Bancorporation  Key Employee Incentive Stock          *
          Option Plan approved by the  shareholders  of the Company of April 28,
          1995   (incorporated   by   reference   to   Exhibit   10.3  of  Zions
          Bancorporation's  Quarterly  Report on Form 10-Q for the quarter ended
          June 30, 1995, File No. 0-2610)

10.7      1998 Amendment to Zions  Bancorporation  Key Employee  Incentive Stock          *
          Option  Plan  (incorporated  by  reference  to  Exhibit  10  of  Zions
          Bancorporation's  Quarterly  Report on Form 10-Q for the quarter ended
          June 30, 1998, File No. 02610)

10.8      Zions  Bancorporation  Deferred  Compensation  Plan for Directors,  as          *
          amended May l, 1991  (incorporated by reference to Exhibit 19 of Zions
          Bancorporation's  Annual  Report  on  Form  10-K  for the  year  ended
          December 31, 1991, File No. 0-2610)

10.9      Zions  Bancorporation  Senior  Management  Value Sharing  Plan,  Award          *
          Period 1993-1996 (incorporated by reference

                                      II-8


<PAGE>

<CAPTION>


          to Exhibit 10.8 of Zions  Bancorporation's  Annual Report on Form 10-K
          for the year ended December 31,1993, File No. 0-2610)

10.10     Zions  Bancorporation  Senior  Management  Value Sharing  Plan,  Award          *
          Period  1994-1997  (incorporated by reference to exhibit 10.9 of Zions
          Bancorporation's  Annual  Report  on  Form  10-K  for the  year  ended
          December 31, 1994, File No. 0-2610)

10.11     Zions Bancorporation Senior Management Value Sharing Plan Award Period          *
          1995-1998  (incorporated  by  reference  to  Exhibit  10.14  of  Zions
          Bancorporation's  Annual  Report  on  Form  10-K  for the  year  ended
          December 31, 1995, File No. 0-2610)

10.12     Zions Bancorporation Senior Management Value Sharing Plan Award Period          *
          1996-1999  (incorporated  by  reference  to  Exhibit  10.16  of  Zions
          Bancorporation's  Annual  Report  on  Form  10-K  for the  year  ended
          December 31, 1996, File No. 0-2610)

10.13     Zions  Bancorporation  Executive Management Pension Plan (incorporated          *
          by reference to Exhibit 10.10 of Zions Bancorporation's  Annual Report
          on Form 10-K for the year ended December 31, 1994, File No. 0-2610)

10.14     Zions Bancorporation Non-Employee Directors Stock Option Plan approved          *
          by the shareholders of the Company on April 26, 1996  (incorporated by
          reference to Exhibit 10 of Zions Bancorporation's  Quarterly Report on
          Form 10-Q for the quarter ended June 30, 1996, File No. 0-2610)

10.15     Zions Bancorporation Pension Plan amended and restated effective April          *
          1,  1997   (incorporated   by   reference   to  Exhibit  10  of  Zions
          Bancorporation's  Quarterly Report on Form 10- Q for the quarter ended
          March 31, 1997, File No. 0-2610)

10.16     Form of Employment Agreement between Zions Bancorporation and Mr. John          *
          Gisi   (incorporated   by   reference   to  Exhibit   10.13  of  Zions
          Bancorporation's  Annual  Report  on  Form  10-K  for the  year  ended
          December 3l, 1995, File No. 0-2610)

10.17     Form  of  Employment  Agreement  between  Pitkin  County  Bank & Trust          *
          Company and Charles B. Israel  (incorporated  by reference to Exhibits
          10.16 to the Registrant's  Form S-4 Registration  Statement,  File No.
          333-23839, filed on March 24, 1997)

10.18     Form of  Employment  Agreement  between  The  First  National  Bank in          *
          Alamosa and David E.  Broyles  (incorporated  by  reference to Exhibit
          10.17 to the

                                      11-9


<PAGE>


<CAPTION>

          Registrant's Form S-4 Registration Statement, File No. 33341821, filed
          on December 10, 1997)

10.19     Form of Employment  Agreement  between Valley  National Bank of Cortez          *
          and Richard C. Tucker  (incorporated  by reference to Exhibit 10.21 to
          the Registrant's Form S-4 Registration Statement,  File No. 333-43405,
          filed on December 29, 1997)

10.20     Form of Employment  Agreement  between Vectra Bank Colorado,  National          *
          Association and James A. Simon  (incorporated  by reference to Exhibit
          10.21 to the Registrant's  Form S-4 Registration  Statement,  File No.
          333-50733, filed on April 22, 1998)

10.21     Form of Employment  Agreement  between Vectra Bank Colorado,  National          *
          Association and John G. Jackson  (incorporated by reference to Exhibit
          10.24 to the Registrant's  Form S-4 Registration  Statement,  File No.
          333-50823, filed on April 23, 1998)

10.22     Form of Employment  Agreement  between Vectra Bank Colorado,  National          *
          Association and Larry G.  Neuschwanger  (incorporated  by reference to
          Exhibit 10.21 to the  Registrant's  Form S-4  Registration  Statement,
          File No. 333-59445, filed on July 20, 1998)

10.23     Form of Employment Agreement between Zions Bancorporation and James C.          *
          Hawkanson    (incorporated  by  reference  to  Exhibit  10.21  to  the
          Registrant's  Form S-4  Registration  Statement,  File No.  333-59335,
          filed on July 17, 1998)

10.24     Form of Employment  Agreement  between Vectra Bank Colorado,  National          *
          Association and David T. Manley  (incorporated by reference to Exhibit
          10.23 to the Registrant's  Form S-4 Registration  Statement,  File No.
          333-59595, filed on July 22, 1998)

10.25     Form of Employment  Agreement  between Vectra Bank Colorado,  National
          Association  and James P. Oaks (filed as Exhibit VII to the  Agreement
          and Plan of Reorganization, filed herewith)

10.26     Form of Employment  Agreement  between Vectra Bank Colorado,  National
          Association and Charles A. Oaks (filed as Exhibit VII to the Agreement
          and Plan of Reorganization, filed herewith)

10.27     Form  of  Non-Competition  Agreement  between  Vectra  Bank  Colorado,
          National  Association  and Dale  Duncan  (filed as  Exhibit  IX to the
          Agreement and Plan of Reorganization, filed herewith)

21        List  of  subsidiaries  of  Zions   Bancorporation   (incorporated  by
          reference to Exhibit 21 of Zions Bancorporation's

                                     II-10


<PAGE>

<CAPTION>


          Annual Report on Form 10-K for the year ended December 31, 1997,  File
          No. 0-2610)

23.1      Consent  of  KPMG  Peat  Marwick  LLP,  independent  certified  public
          accountants for Zions Bancorporation (filed herewith)

23.2      Consent  of  Arthur  Andersen  LLP,   independent   certified   public
          accountants for Sumitomo Bank of California (filed herewith)

23.3      Consent of Duane,  Morris & Heckscher LLP  (contained in their opinion
          filed as Exhibit 5)

23.4      Consent of Duane,  Morris & Heckscher LLP  (contained in their opinion
          flied as Exhibit 8)

24.1      Power  of  Attorney  (set  forth  on  Page  II-5  of the  Registration
          Statement)

99.1      Preliminary  copy of  letter to  shareholders  of  Mountain  Financial
          Holding Company (filed herewith)

99.2      Preliminary  copy of Notice of  Special  Meeting  of  Shareholders  of
          Mountain Financial Holding Company (filed herewith)

99.3      Preliminary  copy of form of proxy for use by shareholders of Mountain
          Financial Holding Company (filed herewith)

99.4      Form of Voting  Agreement  between  Zions  Bancorporation  and various
          shareholders of Mountain  Financial Holding Company (filed herewith as
          Exhibit  III to the  Agreement  and Plan of  Reorganization,  filed as
          Exhibit 2.1 above)
</TABLE>

*    incorporated by reference

                                     II -11





                                                                     EXHIBIT 2.1

                                    EXHIBIT I
                                    ---------

                        HOLDING COMPANY MERGER AGREEMENT
                        --------------------------------









<PAGE>




                               AGREEMENT OF MERGER

         This Agreement of Merger is made and entered into as of [____________],
1998, between VAL COR BANCORPORATION,  INC. ("Val Cor"), a corporation organized
under the laws of the State of Colorado,  and MOUNTAIN FINANCIAL HOLDING COMPANY
(the  "Company"),  a  corporation  organized  under  the  laws of the  State  of
Colorado.  Val Cor and the Company are hereinafter sometimes individually called
a  "Constituent   Corporation"   and   collectively   called  the   "Constituent
Corporations."

                                    RECITALS

         Val Cor is a corporation  duly organized,  validly existing and in good
standing under the laws of the State of Colorado. As of [______________],  1998,
the authorized  capital stock of Val Cor consisted of [_______] shares of Common
Stock,  [_________]  par value,  of which  [___________]  shares were issued and
outstanding;  no shares of capital stock were held in its treasury on such date.
All of the capital stock of Val Cor is owned of record and beneficially by Zions
Bancorporation,  a  corporation  organized  under  the laws of the State of Utah
("Zions Bancorp").

         The Company is a corporation  duly organized,  validly  existing and in
good  standing  under the laws of the State of Colorado.  As of  [_____________]
1998, the authorized  capital stock of the Company consisted of [_______] shares
of Company  Common Stock,  [_____] par value (the "Company  Common  Stock"),  of
which [______]  shares were issued and  outstanding;  no shares of capital stock
were held in its treasury on such date.

         Val Cor and the Company  have  entered  into an  Agreement  and Plan of
Reorganization,  dated  May  [_______],  1998  (the  "Plan of  Reorganization"),
setting forth certain representations,  warranties, and agreements in connection
with the transactions  therein and herein  contemplated,  which contemplates the
merger of the Company with and into Val Cor (the  "Merger") in  accordance  with
this Agreement of Merger (the "Agreement").

         The Boards of  Directors  of each of Val Cor and the  Company  deem the
Merger  advisable  and in  the  best  interests  of  each  corporation  and  its
stockholders.  The Boards of Directors  of each of Val Cor and the  Company,  by
resolutions duly adopted,  have approved the Plan of Reorganization.  The Boards
of Directors of each of Val Cor and the Company,  by  resolutions  duly adopted,
have approved this Agreement. The Boards of Directors of each of Val Cor and the
Company  have  directed  that  this  Agreement,   and   authorization   for  the
transactions  contemplated  hereby,  be submitted to stockholders of Val Cor and
the Company respectively for approval.

         At the  Effective  Date (as  defined  in Section  1.1 below)  shares of
Company  Common Stock shall be converted into the right to receive shares of the
common stock of Zions  Bancorp,  no par value (the "Zions  Bancorp  Stock"),  as
provided herein.

         In   consideration  of  the  premises  and  the  mutual  covenants  and
agreements  herein  contained  and  subject to the terms and  conditions  of the
Agreement, the parties hereto hereby covenant and agree as follows:


<PAGE>

                                    ARTICLE I


         1.1.  Merger of the Company into Val Cor.  The Company  shall be merged
with  and  into  Val Cor on the  date  and at the  time to be  specified  in the
Articles  of  Merger  to be filed  with the  Secretary  of State of the State of
Colorado pursuant to section 7-111-105 of the Colorado Business  Corporation Act
(such date and time being referred to herein as the "Effective Date").

         1.2. Effect of the Merger. At the Effective Date:

                  (a) The  Company  and Val Cor  shall be a single  corporation,
which  shall  be  Val  Cor.  Val  Cor is  hereby  designated  as  the  surviving
corporation  in the Merger and is  hereinafter  sometimes  called the "Surviving
Corporation."

                  (b) The separate existence of the Company shall cease.

                  (c) The  Surviving  Corporation  shall  have  all the  rights,
privileges,  immunities,  and powers and shall  assume and be subject to all the
duties and liabilities of a corporation  organized  under the Colorado  Business
Corporation Act.

                  (d) The Surviving  Corporation  shall thereupon and thereafter
possess all of the rights,  privileges,  immunities, and franchises, of a public
as well as of a private nature, of each of the Constituent Corporations; and all
property,  real,  personal  and mixed,  and all debts due on  whatever  account,
including  subscriptions  to shares and all other choses in action,  and all and
every  other  interest  of and  belonging  to or due to each of the  Constituent
Corporations  shall be taken and deemed to be  transferred  to and vested in the
Surviving  Corporation  without  further act or deed;  and the title to any real
estate,  or  any  interest   therein,   vested  in  either  of  the  Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.

                  (e) The Surviving Corporation shall thenceforth be responsible
and liable for all the  liabilities  and  obligations of each of the Constituent
Corporations;  and any claim  existing  or action or  proceeding  pending  by or
against  either of the  Constituent  Corporations  may be  prosecuted  as if the
Merger had not taken place,  or the Surviving  Corporation may be substituted in
its place. The Surviving Corporation expressly assumes and agrees to perform all
of the Company's  liabilities and  obligations.  Neither the rights of creditors
nor any liens  upon the  property  of either  Constituent  Corporation  shall be
impaired by the Merger.

                  (f) The  Articles  of  Incorporation  of Val Cor as they exist
immediately  prior to the Effective Date shall be the Articles of  Incorporation
of the Surviving Corporation until later amended pursuant to Colorado law.

                  (g) At the Effective Date and until  surrendered  for exchange
and payment,  each outstanding stock certificate  which,  prior to the Effective
Date,  represented shares of Company Common Stock shall, without further action,
cease to be an issued and existing  share and shall be converted into a right to
receive from Zions  Bancorp,  and shall for all purposes  represent the right to
receive,  upon surrender of the certificate  formerly  representing such shares,
the number of shares of Zions Bancorp Stock  specified in Article III;  provided
that, with respect to any matters  relating to stock  certificates  representing
Company  Common Stock,  Zions Bancorp may rely  conclusively  upon the record of
stockholders maintained by the Company containing the names and addresses of the
holders of record of the Company's Common Stock at the Effective Date.


                                      -2-

<PAGE>

         1.3.  Acts to Carry Out This Merger Plan.

                  (a) The Company and its proper  officers and  directors  shall
and will do all such  acts and  things  as may be  necessary  or proper to vest,
perfect, or confirm title to such property or rights in Val Cor and otherwise to
carry out the purposes of this Agreement.

                  (b) If, at any time after the  Effective  Date,  Val Cor shall
consider or be advised that any further  assignments or assurances in law or any
other acts are  necessary  or  desirable to (i) vest,  perfect,  or confirm,  of
record or otherwise, in Val Cor its right, title, or interest in or under any of
the rights,  properties,  or assets of the Company acquired or to be acquired by
Val Cor as a result of, or in connection  with,  the Merger,  or (ii)  otherwise
carry out the purposes of this  Agreement,  the Company and its proper  officers
and directors shall be deemed to have granted to Val Cor an irrevocable power of
attorney  to  execute  and  deliver  all such  proper  deeds,  assignments,  and
assurances in law and to do all acts  necessary or proper to vest,  perfect,  or
confirm title to and possession of such rights, properties, or assets in Val Cor
and  otherwise  to carry out the  purposes  of this  Agreement;  and the  proper
officers  and  directors  of Val Cor are  fully  authorized  in the  name of the
Company or otherwise to take any and all such action.

                                   ARTICLE II

         2.1. Capitalization.  The authorized shares of capital stock of Val Cor
as of the Effective  Date shall be [_________]  shares of Common Stock,  [_____]
par value.

         2.2. By-Laws. The By-Laws of Val Cor as they exist immediately prior to
the Effective Date shall be the By-Laws of Val Cor until later amended  pursuant
to Colorado law.

                                   ARTICLE III

         3.1. Manner of Converting Shares. Subject to the terms, conditions, and
limitations  set forth  herein,  upon  surrender  of his or her  certificate  or
certificates, each holder of shares of Company Common Stock shall be entitled to
receive,  in exchange  for each share of Company  Common Stock held of record by
such  stockholder as of the Effective  Date, that number of shares of the common
stock of Zions Bancorp,  no par value (the "Zions Bancorp Stock")  calculated by
dividing  608,000  by the total  number of shares of Company  Common  Stock that
shall be issued and outstanding at the Effective Date.

         3.2. No  Fractional  Shares.  Zions  Bancorp will not issue  fractional
shares of its stock.  In lieu of fractional  shares of Zions Bancorp  Stock,  if
any, each  shareholder  of the Company who is entitled to a fractional  share of
Zions Bancorp Stock shall receive an amount of cash equal to the product of such
fraction  times $[ insert  closing price of Zions Common Stock on the day before
execution of this Agreement ]. Such fractional  share interest shall not include
the right to vote or to receive dividends or any interest thereon.

         3.3.  Dividends;  Interest.  No  shareholder  of the  Company  will  be
entitled to receive  dividends on his or her Zions Bancorp Stock until he or she
exchanges his or her  certificates  representing  Company Common Stock for Zions
Bancorp  Stock.  Any  dividends  declared on Zions  Bancorp  Stock to holders of
record  on or after  the  Effective  Date  shall,  with  respect  to

                                      -3-


<PAGE>

stock to be delivered  pursuant to this Agreement to shareholders of the Company
who have not exchanged their certificates  representing Company Common Stock for
Zions Bancorp Stock, be paid to the Exchange Agent (as designated in Section 3.4
of this Agreement) and, upon receipt from a former shareholder of the Company of
certificates  representing  shares of Company  Common Stock,  the Exchange Agent
shall  forward  to such  former  shareholder  of the  Company  (i)  certificates
representing his or her shares of Zions Bancorp Stock,  (ii) dividends  declared
thereon  subsequent to the Effective Date (without  interest) and (iii) the cash
value of any fractional shares determined in accordance with Section 3.2 hereof.

         3.4.  Designation of Exchange Agent.

                  (a) The parties of this Agreement hereby designate Zions First
National Bank, a national  banking  association  with its head office located in
Salt Lake City,  Utah ("Zions  Bank") as Exchange  Agent to effect the exchanges
contemplated hereby.

                  (b) Zions Bancorp  will,  promptly  after the Effective  Date,
issue and deliver to Zions Bank the share  certificates  representing  shares of
Zions Bancorp  Stock and the cash to be paid to holders of Company  Common Stock
in accordance with this Agreement.

         3.5. Notice of Exchange.  Promptly after the Effective Date, Zions Bank
shall  mail to each  holder of one or more  certificates  formerly  representing
Company  Common  Stock  except to such  holders as shall have  waived the notice
required  by this  Section  3.5,  a notice  specifying  the  Effective  Date and
notifying  such holder to surrender his or her  certificate or  certificates  to
Zions Bank for exchange.  Such notice shall be mailed to holders by regular mail
at their addresses on the records of the Company.

         3.6. Treatment of Stock Options.  Each stock option to purchase Company
Common Stock not exercised  prior to the Effective Date shall  automatically  be
canceled on and as of the Effective Date.

                                   ARTICLE IV

         4.1.  Counterparts.  This  Agreement  may be  executed  in two or  more
counterparts  each of which shall be deemed to constitute an original,  but such
counterparts  together shall be deemed to be one and the same  instrument and to
become effective when one or more  counterparts  have been signed by each of the
parties  hereto.  It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.

         4.2. Section Headings.  The section and subsection headings herein have
been inserted for  convenience  of reference  only and shall in no way modify or
restrict  any of the terms or  provisions  hereof.  Any  reference to a "person"
herein shall  include an  individual,  firm,  corporation,  partnership,  trust,
government  or  political  subdivision  or  agency or  instrumentality  thereof,
association, unincorporated organization, or any other entity.

         4.3.  Choice of Law and Venue.  This  Agreement  shall be governed  by,
construed,  and  enforced  in  accordance  with the  laws of the  State of Utah,
without giving effect to the principles of conflict of law thereof.  The parties
hereby designate Salt Lake County, Utah and Teller County, Colorado to be proper
jurisdictions  and venues for any suit or action arising out of this  Agreement.
Each of the parties consents to personal jurisdiction in each of


                                      -4-


<PAGE>



such venues for such a proceeding  and agrees that it may be served with process
in any action with respect to this  Agreement or the  transactions  contemplated
thereby by certified or registered  mail,  return receipt  requested,  or to its
registered  agent for service of process in the State of Utah or Colorado.  Each
of the parties irrevocably and unconditionally waives and agrees, to the fullest
extent permitted by law, not to plead any objection that it may now or hereafter
have to the  laying of venue or the  convenience  of the forum of any  action or
claim with respect to this Agreement or the  transactions  contemplated  thereby
brought in the courts aforesaid.

         4.4.  Binding  Agreement.  This  Agreement  shall be  binding  upon the
parties and their respective successors and assigns.

         4.5.   Amendment.   Anything   herein  or  elsewhere  to  the  contrary
notwithstanding,  to the extent permitted by law, this Agreement may be amended,
supplemented,  or interpreted at any time prior to the Effective Date by written
instrument duly authorized and executed by each of the parties hereto,  provided
that this Agreement may not be amended after the action by  shareholders  of the
Company in any respect  that would  prejudice  the  economic  interests  of such
Company shareholders,  or any of them, except as specifically provided herein or
by like action of such shareholders.

         4.6. Termination.  This Agreement shall terminate and be abandoned upon
(i) termination of the Plan of  Reorganization or (ii) the mutual consent of Val
Cor and the Company at any time prior to the Effective  Date, and there shall be
no  liability  on the part of  either  of the  parties  hereto  (or any of their
respective  officers or directors)  except to the extent provided in the Plan of
Reorganization.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                             VAL COR BANCORPORATION, INC.

Attest:                                      By:
        ----------------------------            -------------------------------
              Ray L. Nash                           Gary S. Judd
        Chief Financial Officer                  President and Chief
             and Secretary                        Executive Officer

                                             MOUNTAIN FINANCIAL HOLDING
                                             COMPANY

Attest:                                      By:
       -----------------------------             -------------------------------
                                                        James P. Oaks
                                                    President and Chief
                                                     Executive Officer


                                      -5-


<PAGE>




- --------------------------------------------
                                            )
State of Colorado                           )
                                            )       ss.
County of Denver                            )
                                            )
- --------------------------------------------

          On this [_________]  day of  [_________],  1998,  before me personally
appeared  Gary S.  Judd,  to me known to be the  President  and Chief  Executive
Officer of Val Cor Bancorporation,  Inc., and acknowledged said instrument to be
the  free  and  voluntary  act and  deed of said  corporation,  for the uses and
purposes therein mentioned, and on oath stated that he was authorized to execute
said  instrument  and  that  the  seal  affixed  is the  corporate  seal of said
corporation.

          In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.




                                                     ---------------------------
                                                             Notary Public





<PAGE>


- --------------------------------------------
                                            )
State of Colorado                           )
                                            )       ss.
County of Teller                            )
                                            )
- --------------------------------------------



         On this  [________]  day of  [__________]  1998,  before  me personally
appeared  James P. Oaks,  to me known to be the  President  and Chief  Executive
Officer of Mountain Financial Holding Company,  and acknowledged said instrument
to be the free and voluntary act and deed of said corporation,  for the uses and
purposes therein mentioned, and on oath stated that he was authorized to execute
said  instrument  and  that  the  seal  affixed  is the  corporate  seal of said
corporation.

          In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.




                                                      --------------------------
                                                              Notary Public


<PAGE>




                                   EXHIBIT II
                                   ----------

                              BANK MERGER AGREEMENT
                              ---------------------











<PAGE>




                               AGREEMENT OF MERGER

         This  Agreement  of Merger is made and  entered  into as of  [_______],
1998, between BANK COLORADO,  NATIONAL ASSOCIATION  ("BCNA"), a national banking
association organized under the laws of the United States, and MOUNTAIN NATIONAL
BANK (the "Bank"),  a national banking  association  organized under the laws of
the United  States.  BCNA and the Bank are  hereinafter  sometimes  individually
called a "Constituent  Association"  and  collectively  called the  "Constituent
Associations."

                                    RECITALS

         BCNA is a national banking association duly organized, validly existing
and in good standing under the laws of the United States. As of [______],  1998,
the  authorized  capital stock of BCNA  consisted of [_______]  shares of Common
Stock,  $5.00 par value, of which [________] shares were issued and outstanding;
no shares of capital stock were held in its treasury on such date.

         The Bank is a national banking association  organized under the laws of
the United States. As of [________],  1998, the authorized  capital stock of the
Bank consisted of [_________]  shares of Bank Common Stock,  [_______] par value
(the "Bank Common Stock"),  of which [ ] shares were issued and outstanding;  no
shares of capital stock were held in its treasury on such date.

         BCNA  and  the  Bank  have  entered  into  an  Agreement  and  Plan  of
Reorganization, dated May [_____], 1998 (the "Plan of Reorganization"),  setting
forth certain representations, warranties, and agreements in connection with the
transactions therein and herein  contemplated,  which contemplates the merger of
the Bank with and into BCNA (the "Merger") in accordance  with this Agreement of
Merger (the "Agreement").

         The  Boards of  Directors  of each of BCNA and the Bank deem the Merger
advisable and in the best interests of each  association  and its  stockholders.
The  Boards of  Directors  of each of BCNA and the  Bank,  by  resolutions  duly
adopted,  have approved the Plan of  Reorganization.  The Boards of Directors of
each of BCNA and the Bank,  by  resolutions  duly  adopted,  have  approved this
Agreement.  The Boards of Directors  of each of BCNA and the Bank have  directed
that this Agreement, and authorization for the transactions contemplated hereby,
be submitted to stockholders of BCNA and the Bank respectively for approval.

         In   consideration  of  the  premises  and  the  mutual  covenants  and
agreements  herein  contained  and  subject to the terms and  conditions  of the
Agreement, the parties hereto hereby covenant and agree as follows:


                                    ARTICLE I

         1.1.  Merger of the Bank into BCNA.  The Bank shall be merged  with and
into BCNA on the date and at the time to be  specified in the Articles of Merger
to be filed with the  Comptroller of the Currency  pursuant to the National Bank
Act (such date and time being referred to herein as the "Effective Date").

         1.2. Effect of the Merger. At the Effective Date:




<PAGE>

                  (a) The  Bank and BCNA  shall be a single  association,  which
shall be BCNA.  BCNA is hereby  designated as the surviving  association  in the
Merger and is hereinafter sometimes called the "Surviving Association."

                  (b) The separate existence of the Bank shall cease.

                  (c) The  currently  outstanding  [ ] shares of common stock of
BCNA,  each of $5.00 par value,  will remain  outstanding as shares of the $5.00
par value common stock of BCNA, and the holders of such stock shall retain their
present rights.

                  (d) The shares of Bank Common Stock shall be canceled.

                  (e) The  Surviving  Association  shall  have  all the  rights,
privileges,  immunities,  and powers and shall  assume and be subject to all the
duties and  liabilities of a national  banking  association  organized under the
National Bank Act.

                  (f) The Surviving  Association  shall thereupon and thereafter
possess all of the rights,  privileges,  immunities, and franchises, of a public
as well as of a private nature, of each of the Constituent Associations; and all
property,  real,  personal  and mixed,  and all debts due on  whatever  account,
including  subscriptions  to shares and all other choses in action,  and all and
every  other  interest  of and  belonging  to or due to each of the  Constituent
Associations  shall be taken and deemed to be  transferred  to and vested in the
Surviving  Association  without  further act or deed;  and the title to any real
estate,  or  any  interest   therein,   vested  in  either  of  the  Constituent
Associations shall not revert or be in any way impaired by reason of the Merger.

                  (g) The Surviving Association shall thenceforth be responsible
and liable for all the  liabilities  and  obligations of each of the Constituent
Associations;  and any claim  existing  or action or  proceeding  pending  by or
against  either of the  Constituent  Associations  may be  prosecuted  as if the
Merger had not taken place,  or the Surviving  Association may be substituted in
its place. The Surviving Association expressly assumes and agrees to perform all
of the liabilities and obligations of the Bank.  Neither the rights of creditors
nor any liens  upon the  property  of either  Constituent  Association  shall be
impaired by the Merger.

                  (h) The  name of the  Surviving  Association  shall  be  "Bank
Colorado, National Association."

                  (i)  The  Articles  of  Association  of  BCNA  as  they  exist
immediately  prior to the Effective Date shall be the Articles of Association of
the Surviving Association until later amended pursuant to the laws of the United
States.

                  (j) The By-Laws of BCNA as they exist immediately prior to the
Effective Date shall be the By-Laws of BCNA until later amended  pursuant to the
laws of the United States.

         1.3.  Acts to Carry Out This Merger Plan.

                  (a) The Bank and its proper  officers and directors  shall and
will do all such acts and things as may be necessary or proper to vest, perfect,
or confirm  title to such  property or rights in BCNA and otherwise to carry out
the purposes of this Agreement.


                                      -2-


<PAGE>

                  (b) If,  at any time  after the  Effective  Date,  BCNA  shall
consider or be advised that any further  assignments or assurances in law or any
other acts are  necessary  or  desirable to (i) vest,  perfect,  or confirm,  of
record or otherwise,  in BCNA its right,  title,  or interest in or under any of
the rights, properties, or assets of the Bank acquired or to be acquired by BCNA
as a result of, or in connection  with, the Merger,  or (ii) otherwise carry out
the purposes of this  Agreement,  the Bank and its proper officers and directors
shall be deemed to have  granted to BCNA an  irrevocable  power of  attorney  to
execute and deliver all such proper deeds,  assignments,  and  assurances in law
and to do all acts necessary or proper to vest, perfect, or confirm title to and
possession of such rights,  properties, or assets in BCNA and otherwise to carry
out the purposes of this  Agreement;  and the proper  officers and  directors of
BCNA are fully  authorized  in the name of the Bank or otherwise to take any and
all such action.

                                   ARTICLE II

         2.1.  Counterparts.  This  Agreement  may be  executed  in two or  more
counterparts  each of which shall be deemed to constitute an original,  but such
counterparts  together shall be deemed to be one and the same  instrument and to
become effective when one or more  counterparts  have been signed by each of the
parties  hereto.  It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.

         2.2. Section Headings.  The section and subsection headings herein have
been inserted for  convenience  of reference  only and shall in no way modify or
restrict  any of the terms or  provisions  hereof.  Any  reference to a "person"
herein shall  include an  individual,  firm,  corporation,  partnership,  trust,
government  or  political  subdivision  or  agency or  instrumentality  thereof,
association, unincorporated organization, or any other entity.

         2.3.  Choice of Law and Venue.  This  Agreement  shall be governed  by,
construed,  and  enforced  in  accordance  with the  laws of the  State of Utah,
without giving effect to the principles of conflict of law thereof.  The parties
hereby designate Salt Lake County, Utah and Teller County, Colorado to be proper
jurisdictions  and venues for any suit or action arising out of this  Agreement.
Each of the parties consents to personal jurisdiction in each of such venues for
such a  proceeding  and agrees that it may be served with  process in any action
with  respect to this  Agreement  or the  transactions  contemplated  thereby by
certified or registered  mail,  return receipt  requested,  or to its registered
agent for  service  of  process  in the State of Utah or  Colorado.  Each of the
parties irrevocably and unconditionally waives and agrees, to the fullest extent
permitted by law, not to plead any objection  that it may now or hereafter  have
to the  laying of venue or the  convenience  of the forum of any action or claim
with respect to this Agreement or the transactions  contemplated thereby brought
in the courts aforesaid.

         2.4.  Binding  Agreement.  This  Agreement  shall be  binding  upon the
parties and their respective successors and assigns.

         2.5.   Amendment.   Anything   herein  or  elsewhere  to  the  contrary
notwithstanding,  to the extent permitted by law, this Agreement may be amended,
supplemented,  or interpreted at any time prior to the Effective Date by written
instrument duly authorized and executed by each of the parties hereto.


                                      -3-



<PAGE>

         2.6. Termination.  This Agreement shall terminate and be abandoned upon
(i) termination of the Plan of Reorganization or (ii) the mutual consent of BCNA
and the Bank at any time  prior to the  Effective  Date,  and there  shall be no
liability  on the  part  of  either  of the  parties  hereto  (or  any of  their
respective  officers or directors)  except to the extent provided in the Plan of
Reorganization.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                             BANK COLORADO, NATIONAL ASSOCIATION

Attest:                                      By:
        ----------------------------            -------------------------------
              Ray L. Nash                           Gary S. Judd
        Chief Financial Officer                  President and Chief
             and Secretary                        Executive Officer


                                             MOUNTAIN NATIONAL BANK

Attest:                                      By:
       -----------------------------             -------------------------------
                                                        James P. Oaks
                                                    President and Chief
                                                     Executive Officer






                                      -4-





<PAGE>



- --------------------------------------------
                                            )
State of Colorado                           )
                                            )       ss.
County of Denver                            )
                                            )
- --------------------------------------------

          On this [_______] day of [______], 1998, before me personally appeared
Gary S. Judd,  to me known to be the President  and Chief  Executive  Officer of
Bank Colorado, National Association,  and acknowledged said instrument to be the
free and voluntary act and deed of said  association,  for the uses and purposes
therein  mentioned,  and on oath stated that he was  authorized  to execute said
instrument and that the seal affixed is the corporate seal of said association.

          In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.



                                                        ------------------------
                                                             Notary Public











                                      -5-




<PAGE>



- --------------------------------------------
                                            )
State of Colorado                           )
                                            )       ss.
County of Teller                            )
                                            )
- --------------------------------------------



          On this [ ] day of [ ], 1998,  before me personally  appeared James P.
Oaks, to me known to be the President  and Chief  Executive  Officer of Mountain
National Bank, and acknowledged said instrument to be the free and voluntary act
and deed of said association,  for the uses and purposes therein mentioned,  and
on oath stated that he was  authorized to execute said  instrument  and that the
seal affixed is the corporate seal of said association.

          In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.



                                                           ---------------------
                                                               Notary Public


<PAGE>




                                   EXHIBIT III
                                   -----------

                                VOTING AGREEMENT
                                ----------------




















<PAGE>













                                  May [ ], 1998

Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah  84111

Mesdames and Gentlemen:

         The undersigned understands that Zions Bancorporation ("Zions Bancorp")
is about to enter into an Agreement  and Plan of  Reorganization  with  Mountain
Financial  Holding  Company (the  "Company")  (the  "Agreement").  The Agreement
provides  for the merger of the  Company  with and into Val Cor  Bancorporation,
Inc.,  a  wholly-owned  subsidiary  of  Zions  Bancorp  (the  "Merger")  and the
conversion of  outstanding  shares of Company  Stock into Zions  Bancorp  Common
Stock and cash in lieu of  fractional  shares  in  accordance  with the  formula
therein set forth.

         In order to induce  Zions  Bancorp  to enter  into the  Agreement,  and
intending to be legally bound hereby, the undersigned, subject to the conditions
hereinafter  stated,  represents,  warrants,  and  agrees  that  at the  Company
Shareholders'  Meeting  contemplated by Section 4.1 of the Agreement and Plan of
Reorganization  (the "Meeting"),  and any adjournment  thereof,  the undersigned
will, in person or by proxy, vote or cause to be voted in favor of the Agreement
and the  Merger the shares of Company  Common  Stock  beneficially  owned by the
undersigned  individually or, to the extent of the  undersigned's  proportionate
voting  interest,  jointly with other persons,  as well as, to the extent of the
undersigned's  proportionate voting interest, any other shares of Company Common
Stock over which the undersigned may hereafter acquire  beneficial  ownership in
such capacities (collectively,  the "Shares"). Subject to the final paragraph of
this agreement, the undersigned further agrees that he will use his best efforts
to cause any other  shares of Company  Common  Stock over which he has or shares
voting power to be voted in favor of the Agreement and the Merger.

         The undersigned further represents, warrants, and agrees that beginning
upon the  authorization  and execution of the Agreement by the Company until the
earlier of (i) the  consummation  of the Merger or (ii) the  termination  of the
Agreement in accordance with its terms,  the undersigned  will not,  directly or
indirectly:

         (a) vote any of the Shares,  or cause or permit any of the Shares to be
voted,  in favor of any other sale of control,  merger,  consolidation,  plan of
liquidation,  sale of assets,  reclassification,  or other transaction involving
the Company or any of its subsidiaries  which would have the effect of assisting
or  facilitating  the  acquisition  of control  by any  person  other than Zions
Bancorp or an affiliate  thereof over the Company or any substantial  portion of
its assets or assisting or facilitating the acquisition of control by any person
other than Zions



<PAGE>

Bancorp or an  affiliate,  or the Company or a  wholly-owned  subsidiary  of the
Company,  of any  subsidiary  of the Company or any  substantial  portion of its
assets.  As used herein,  the term "control" means (1) the ability to direct the
voting of 10 percent or more of the  outstanding  voting  securities of a person
having  ordinary voting power in the election of directors or in the election of
any other  body  having  similar  functions  or (2) the  ability  to direct  the
management and policies of a person,  whether  through  ownership of securities,
through any contract, arrangement, or understanding or otherwise.

         (b) voluntarily sell or otherwise  transfer any of the Shares, or cause
or permit any of the Shares to be sold or otherwise  transferred (i) pursuant to
any tender offer,  exchange offer, or similar  proposal made by any person other
than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain
control  (as the term  "control"  is defined  in  paragraph  (a),  above) of the
Company, any of its subsidiaries or any substantial portion of the assets of the
Company or any  subsidiary  thereof  or to any other  person  (other  than Zions
Bancorp or an affiliate thereof) under circumstances where such sale or transfer
may  reasonably  be expected to assist a person  seeking to obtain such control,
(iii) for the purpose of avoiding the obligations of the undersigned  under this
agreement,  or (iv) to any transferee unless such transferee expressly agrees in
writing to be bound by the terms of this agreement in all events.

         It is understood and agreed that this  agreement  relates solely to the
capacity of the  undersigned as a shareholder or other  beneficial  owner of the
Shares  and does not  prohibit  the  undersigned,  if a member  of the  Board of
Directors  of the  Company  or a member of the Board of  Directors  of  Mountain
National Bank, from acting, in his or her capacity as a director or officer,  as
the  undersigned  may determine to be appropriate in light of the obligations of
the  undersigned as a director or officer.  It is further  understood and agreed
that the term "Shares"  shall not include any securities  beneficially  owned by
the  undersigned as a trustee or fiduciary for another (unless such other person
is  affiliated  with the  undersigned  or is bound by an  agreement  with  Zions
Bancorp substantially similar to this agreement), and that this agreement is not
in  any  way  intended  to  affect  the  exercise  by  the  undersigned  of  the
undersigned's fiduciary responsibility in respect of any such securities.

                                                 Very truly yours,


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

Accepted and Agreed to:
ZIONS BANCORPORATION

By:
        ---------------------------
Title:
        ---------------------------









<PAGE>



Name of Shareholder:

          Shares of Common Stock of Mountain Financial Holding Company
                               Beneficially Owned
                              As of May [__], 1998


  Name(s) of                                                 Number of
Record Owner(s)            Beneficial Ownership 1/            Shares
- ---------------            -----------------------            ------















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

         For purposes of this Agreement,  shares are  beneficially  owned by the
shareholder named above if held in any capacity other than a fiduciary  capacity
(other than a  revocable  living  trust and other than a  fiduciary  capacity on
behalf of a person  who is  affiliated  with the  shareholder  or is bound by an
agreement with Zions Bancorp substantially similar to this agreement) and if the
shareholder  named  above has the power  (alone  or, in the case of shares  held
jointly with his or her spouse,  together  with his or her spouse) to direct the
voting of such shares.





<PAGE>




                                   EXHIBIT VII
                                   -----------

                              EMPLOYMENT AGREEMENT
                              --------------------


<PAGE>




                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT  AGREEMENT (the "Agreement") made and entered into this
[___]  day of  [____],  1998,  by and  between  [____]  ("Executive")  and  BANK
COLORADO,  NATIONAL ASSOCIATION,  a national banking association organized under
the laws of the United States ("Resulting Bank")

                         W I T N E S S E T H  T H A T :

         WHEREAS, the Agreement and Plan of Reorganization (the "Plan") dated as
of May [____], 1998 by and among Zions Bancorporation, a Utah corporation having
its  principal  office  in Salt  Lake  City,  Utah  ("Zions  Bancorp"),  Val Cor
Bancorporation,  Inc., a Colorado  corporation  having its  principal  office in
Cortez, Colorado, Resulting Bank, Mountain Financial Holding Company, a Colorado
corporation having its principal office in Woodland Park, Colorado, and Mountain
National Bank, a national  banking  association  organized under the laws of the
United States (the "Bank"),  provides that the Bank will be merged with and into
Resulting Bank;

         WHEREAS, Executive is [_____________________________] of the Bank;

         WHEREAS,  Resulting  Bank desires to secure the employment of Executive
upon consummation of the transactions contemplated in the Plan;

         WHEREAS,  Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein; and

         WHEREAS,  to assist in achieving  the  objectives  of the  transactions
described in the Plan, section 4.10 of the Plan contemplates that Executive will
enter into an  employment  agreement as a condition to the  consummation  of the
transactions described therein.

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties agree as follows:

         1.       Employment; Responsibilities and Duties.

         (a)  Resulting  Bank hereby agrees to employ  Executive,  and Executive
hereby  agrees  to  serve  as  [_____________]  of  Resulting  Bank  and  of any
depository institution which is successor-in-interest  thereto ("Resulting Bank"
hereafter to include any depository  institution which is  successor-in-interest
thereto)  during  the Term of  Employment.  Executive  shall  have such  duties,
responsibilities, and authority as shall be set forth in the bylaws of Resulting
Bank  on the  date  of this  Agreement  or as may  otherwise  be  determined  by
Resulting Bank.

         (b)  Executive  shall  devote his full working time and best efforts to
the  performance  of  his  responsibilities  and  duties  hereunder  and  to the
retention of the customer relationships to which the Bank has been a party prior
to the date of this  Agreement.  During the Term of Employment,  Executive shall
not,  without the prior  written  consent of the Board of Directors of Resulting
Bank,  render  services as an employee,  independent  contractor,  or otherwise,
whether or not compensated, to any person or entity other than Resulting Bank or




<PAGE>

its  affiliates;   provided  that  Executive  may,  where  involvement  in  such
activities  does not  individually or in the aggregate  significantly  interfere
with the  performance  by Executive of his duties or violate the  provisions  of
section 4 hereof, (i) render services to charitable  organizations,  (ii) manage
his personal  investments,  and (iii) with the prior  permission of the Board of
Directors of Resulting Bank, hold such other directorships or part-time academic
appointments  or have such other  business  affiliations  as would  otherwise be
prohibited under this section 1.

         2.       Term of Employment.

         (a) The term of this  Agreement  ("Term  of  Employment")  shall be the
period  commencing on the date hereof (the  "Commencement  Date") and continuing
until the Termination Date, which shall mean the earliest to occur of:

                  (i) the third anniversary of the Commencement Date, unless the
Term of Employment  shall be extended by mutual  written  agreement of Executive
and Resulting Bank;

                  (ii)     the death of Executive;

                  (iii)  Executive's  inability to perform his duties hereunder,
as a result of physical or mental  disability  as  reasonably  determined by the
personal  physician of Executive,  for a period of at least 180 consecutive days
or for at least 180 days during any period of twelve  consecutive  months during
the Term of Employment; or

                  (iv) the discharge of Executive by Resulting Bank "for cause,"
which shall mean one or more of the following:

                           (A) any willful or gross misconduct by Executive with
respect to the business and affairs of Resulting Bank, or with respect to any of
its  affiliates for which  Executive is assigned  material  responsibilities  or
duties;

                           (B) the  conviction  of Executive of a felony  (after
the earlier of the expiration of any applicable appeal period without perfection
of an appeal by  Executive  or the  denial of any  appeal as to which no further
appeal or review is  available  to  Executive)  whether or not  committed in the
course of his employment by Resulting Bank;

                           (C) Executive's willful neglect,  failure, or refusal
to carry out his duties hereunder in a reasonable manner; or

                           (D) the breach by Executive of any  representation or
warranty in section 6(a) hereof or of any  agreement  contained in section 1, 4,
5, or 6(b) hereof, which breach is material and adverse to Resulting Bank or any
of its affiliates for which Executive is assigned material  responsibilities  or
duties; or

                  (v)  Executive's resignation from  his position as [_________]
of Resulting Bank; or

                  (vi) the  termination of  Executive's  employment by Resulting
Bank  "without  cause," which shall be for any reason other than those set forth
in subsections (i), (ii), (iii),


                                      -2-

<PAGE>

(iv), or (v) of this section 2(a), at any time, upon the thirtieth day following
notice to Executive.

         (b) In the event that the Term of Employment  shall be  terminated  for
any reason other than that set forth in section 2(a)(vi) hereof, Executive shall
be entitled to receive, upon the occurrence of any such event:

                  (i) any salary (as hereinafter  defined)  payable  pursuant to
section 3(a)(i) hereof which shall have accrued as of the Termination Date; and

                  (ii) such  rights as  Executive  shall have  accrued as of the
Termination  Date  under  the  terms of any  plans or  arrangements  in which he
participates  pursuant to section 3(b) hereof,  any right to  reimbursement  for
expenses  accrued as of the  Termination  Date payable  pursuant to section 3(e)
hereof,  and the right to receive the cash  equivalent  of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(c) hereof.

         (c) In the event that the Term of Employment  shall be  terminated  for
the reason set forth in section 2(a)(vi) hereof,  Executive shall be entitled to
receive:

                  (i)  for  the  period   commencing  on  the  date  immediately
following  the  Termination  Date  and  ending  upon  and  including  the  third
anniversary of the  Commencement  Date,  salary payable at the rate  established
pursuant  to section  3(a)(i)  hereof,  in a manner  consistent  with the normal
payroll  practices  of Resulting  Bank with  respect to  executive  personnel as
presently  in effect or as they may be modified by  Resulting  Bank from time to
time; and

                  (ii)  such  rights as  Executive  may have  accrued  as of the
Termination  Date  under  the  terms of any  plans or  arrangements  in which he
participates  pursuant to section 3(b) hereof,  any right to  reimbursement  for
expenses  accrued as of the  Termination  Date payable  pursuant to section 3(e)
hereof,  and the right to receive the cash  equivalent  of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(c) hereof.

         3.  Compensation.  For the services to be  performed  by Executive  for
Resulting  Bank under this  Agreement,  Executive  shall be  compensated  in the
following manner:

         (a)      Salary.

                  (i) During  the Term of  Employment  Resulting  Bank shall pay
Executive a salary  which shall be at a rate of not less than $____2/ per annum.
Salary  shall be payable in  accordance  with the normal  payroll  practices  of
Resulting Bank with respect to executive  personnel as presently in effect or as
they may be modified by Resulting Bank from time to time.

                  (ii) During the Term of Employment Executive shall be eligible
to be considered  for salary  increases,  upon review,  in  accordance  with the
compensation  policies of Resulting Bank with respect to executive  personnel as
presently  in effect or as they may be modified by  Resulting  Bank from time to
time.



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

     Insert $95,000 for James P. Oaks, $83,000 for Charles A. Oaks.


                                      -3-

<PAGE>

         (b)  Employee  Benefit  Plans  or  Arrangements.  During  the  Term  of
Employment,  Executive shall be entitled to participate in all employee  benefit
plans of  Resulting  Bank,  as presently in effect or as they may be modified by
Resulting  Bank from time to time,  under  such  terms as may be  applicable  to
officers of  Executive's  rank  employed by  resulting  Bank or its  affiliates,
including,  without limitation,  plans providing  retirement  benefits,  medical
insurance,  life  insurance,  disability  insurance,  and  accidental  death  or
dismemberment insurance.

         (c) Vacation and Sick Leave.  During the Term of Employment,  Executive
shall be entitled to paid annual  vacation  periods and sick leave in accordance
with the policies of Resulting Bank as in effect as of the Commencement  Date or
as may be modified by Resulting  Bank from time to time as may be  applicable to
officers of Executive's  rank employed by Resulting Bank or its affiliates,  but
in no event less than that  provided to  Executive  by the Bank at December  31,
1997.

         (d)  Withholding.  All  compensation to be paid to Executive  hereunder
shall be subject to required withholding and other taxes.

         (e)  Expenses.  During  the  Term of  Employment,  Executive  shall  be
reimbursed  for  reasonable  travel  and  other  expenses  incurred  or  paid by
Executive  in  connection  with  the  performance  of his  services  under  this
Agreement,  upon  presentation  of expense  statements or vouchers or such other
supporting information as may from time to time be requested, in accordance with
such policies of Resulting Bank as are in effect as of the Commencement Date and
as may be modified by Resulting Bank from time to time,  under such terms as may
be applicable to officers of Executive's  rank employed by Resulting Bank or its
affiliates.

         (f) Salary  Continuation  Agreement.  Resulting Bank hereby assumes the
obligations  of the  Bank  under  the  Executive  Employee  Salary  Continuation
Agreement  dated  December  17, 1992 between the Bank and  Executive.  Executive
agrees that,  for purposes of Section 3.5(b) of such  agreement,  any changes in
Executive's title, duties, responsibilities, or compensation as provided in this
Agreement or resulting  from the merger of the Bank and Resulting Bank have been
made with Executive's consent.

         [(g)  Automobile.  During the Term of  Employment,  Executive  shall be
entitled to the use of the automobile owned by the Bank and used by Executive as
of January 1, 1998. Executive shall be responsible for all expenses of ownership
and use of such  automobile,  subject to  reimbursement of expenses for business
use in accordance  with section 3(e).  Resulting  Bank shall not be obligated to
replace such automobile upon the end of its useful life,  whether by normal wear
and tear, accident, or otherwise.

         (h) Country Club.  During the Term of Employment,  Resulting Bank shall
reimburse Executive for dues for one country club of Executive's choice.]3/

         4.  Confidential Business Information; Non-Competition.

         (a) Executive  acknowledges  that certain  business  methods,  creative
techniques,  and technical  data of Zions  Bancorp and Resulting  Bank and their
affiliates and the like are


- ----------------------
     Section 3(g) and (h) shall be included in James P. Oaks's agreement only.



                                      -4-


<PAGE>

deemed by Resulting Bank to be and are in fact confidential business information
either of Zions Bancorp or Resulting  Bank or their  affiliates or are entrusted
to third parties.  Such confidential  information includes but is not limited to
procedures,  methods,  sales  relationships  developed  while in the  service of
Resulting Bank or its affiliates, knowledge of customers and their requirements,
marketing  plans,  marketing  information,   studies,  forecasts,  and  surveys,
competitive analyses, mailing and marketing lists, new business proposals, lists
of  vendors,  consultants,  and other  persons  who  render  service  or provide
material  to  Zions  Bancorp  or  Resulting  Bank  or  their   affiliates,   and
compositions,  ideas,  plans, and methods belonging to or related to the affairs
of  Zions  Bancorp  or  Resulting  Bank or  their  affiliates.  In this  regard,
Resulting Bank asserts proprietary rights in all of its business information and
that of its affiliates  except for such  information as is clearly in the public
domain. Notwithstanding the foregoing, information that would be generally known
or available to persons skilled in Executive's  fields shall be considered to be
"clearly in the public  domain"  for the  purposes  of the  preceding  sentence.
Executive agrees that he will not disclose or divulge to any third party, except
as may be required by his duties hereunder,  by law,  regulation,  or order of a
court or government  authority,  or as directed by Resulting  Bank, nor shall he
use to the detriment of Resulting  Bank or its affiliates or use in any business
or on behalf of any business  competitive with or  substantially  similar to any
business  of  Zions  Bancorp  or  Resulting  Bank  or  their   affiliates,   any
confidential  business  information obtained during the course of his employment
by Resulting Bank. The foregoing shall not be construed as restricting Executive
from disclosing such  information to the employees of Zions Bancorp or Resulting
Bank or their affiliates.

         (b) Executive hereby agrees that from the  Commencement  Date until the
second anniversary of the Termination Date, Executive will not (i) engage in the
banking  business  other than on behalf of Zions  Bancorp or  Resulting  Bank or
their affiliates within the Market Area (as hereinafter defined),  (ii) directly
or  indirectly  own,  manage,  operate,  control,  be  employed  by, or  provide
management or consulting services in any capacity to any firm,  corporation,  or
other entity  (other than Zions Bancorp or Resulting  Bank or their  affiliates)
engaged  in the  banking  business  in the Market  Area,  or (iii)  directly  or
indirectly solicit or otherwise  intentionally  cause any employee,  officer, or
member of the  respective  Boards of Directors  of Resulting  Bank or any of its
affiliates to engage in any action  prohibited under (i) or (ii) of this section
4(b);  provided  that the ownership by Executive as an investor of not more than
five percent of the outstanding  shares of stock of any corporation  whose stock
is listed for trading on any  securities  exchange or is quoted on the automated
quotation system of the National Association of Securities Dealers, Inc., or the
shares of any  investment  company as  defined  in  section 3 of the  Investment
Company Act of 1940, as amended,  shall not in itself  constitute a violation of
Executive's obligations under this section 4(b).

         (c)  Executive  acknowledges  and agrees that  irreparable  injury will
result to Resulting  Bank in the event of a breach of any of the  provisions  of
this section 4 (the  "Designated  Provisions") and that Resulting Bank will have
no adequate remedy at law with respect thereto.  Accordingly,  in the event of a
material breach of any Designated Provision,  and in addition to any other legal
or equitable remedy Resulting Bank may have, Resulting Bank shall be entitled to
the  entry  of  a  preliminary  and  permanent  injunction  (including,  without
limitation,  specific performance) by a court of competent  jurisdiction in Salt
Lake County,  Utah,  Teller  County,  Colorado,  or  elsewhere,  to restrain the
violation or breach thereof by Executive or any affiliates, agents, or any other
persons acting for or with Executive in any capacity  whatsoever,  and Executive
submits to the jurisdiction of such court in any such action.



                                      -5-


<PAGE>

         (d) It is the desire and intent of the parties that the  provisions  of
this  section 4 shall be enforced to the fullest  extent  permissible  under the
laws and public policies  applied in each  jurisdiction in which  enforcement is
sought.  Accordingly,  if any  particular  provision  of this section 4 shall be
adjudicated  to be  invalid or  unenforceable,  such  provision  shall be deemed
amended  to delete  therefrom  the  portion  thus  adjudicated  to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular  jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable,  provisions similar
hereto or other  provisions  so as to provide to Resulting  Bank, to the fullest
extent permitted by applicable law, the benefits intended by this section 4.

         (e) As used  herein,  "Market  Area" shall mean the counties of El Paso
and Teller, Colorado.

         5. Life Insurance.  In light of the unusual abilities and experience of
Executive,  Resulting  Bank in its discretion may apply for and procure as owner
and for its own benefit  insurance on the life of Executive,  in such amount and
in such  form as  Resulting  Bank may  choose.  Resulting  Bank  shall  make all
payments for such  insurance and shall  receive all benefits from it.  Executive
shall have no interest  whatsoever  in any such  policy or policies  but, at the
request of Resulting Bank, shall submit to medical  examinations and supply such
information  and execute  such  documents as may  reasonably  be required by the
insurance  company  or  companies  to  which  Resulting  Bank  has  applied  for
insurance.

         6.       Representations and Warranties.

         (a)  Executive  represents  and  warrants  to  Resulting  Bank that his
execution,  delivery,  and  performance  of this Agreement will not result in or
constitute  a breach of or  conflict  with any  term,  covenant,  condition,  or
provision  of any  commitment,  contract,  or  other  agreement  or  instrument,
including,   without  limitation,  any  other  employment  agreement,  to  which
Executive is or has been a party.

         (b) Executive shall indemnify, defend, and hold harmless Resulting Bank
for, from, and against any and all losses, claims, suits, damages,  expenses, or
liabilities,  including  court costs and counsel fees,  which Resulting Bank has
incurred or to which Resulting Bank may become subject,  insofar as such losses,
claims, suits, damages,  expenses,  liabilities,  costs, or fees arise out of or
are based upon any failure of any  representation  or warranty of  Executive  in
section 6(a) hereof to be true and correct when made.

         7. Notices.  All notices,  consents,  waivers, or other  communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram,  by express courier,  or sent by registered or certified mail,  return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:

                                      -6-


<PAGE>

If to Resulting Bank:

         [________________________________]
         [________________________________]
         [________________________________]
         [________________________________]

         Attention:  Chief Executive Officer

With a required copy to:

         Brian D. Alprin, Esq.
         Duane, Morris & Heckscher LLP
         1667 K Street, N.W., Suite 700
         Washington, D.C.  20006

If to Executive:

         [________________________________]
         [________________________________]
         [________________________________]
         [________________________________]


All such  notices  shall be  deemed to have  been  given on the date  delivered,
transmitted, or mailed in the manner provided above.

         8. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.

         9. Governing Law. This Agreement shall be governed by,  construed,  and
enforced in accordance with the laws of the State of Utah, without giving effect
to the principles of conflict of law thereof.  The parties hereby designate Salt
Lake County,  Utah and Teller County,  Colorado to be proper  jurisdictions  and
venues for any suit or action arising out of this Agreement. Each of the parties
consents to personal  jurisdiction  in each of such venues for such a proceeding
and agrees that he or it may be served with  process in any action with  respect
to this  Agreement  or the  transactions  contemplated  thereby by  certified or
registered  mail,  return  receipt  requested,  or to its  registered  agent for
service  of  process  in the  state  of Utah or  Colorado.  Each of the  parties
irrevocably  and  unconditionally  waives  and  agrees,  to the  fullest  extent
permitted by law, not to plead any objection  that it may now or hereafter  have
to the  laying of venue or the  convenience  of the forum of any action or claim
with respect to this Agreement or the transactions  contemplated thereby brought
in the courts aforesaid.

         10.  Entire   Agreement.   This   Agreement   constitutes   the  entire
understanding  between  Resulting  Bank and  Executive  relating  to the subject
matter hereof.  Any previous  agreements or  understandings  between the parties
hereto or between  Executive and the Bank or any of its  affiliates or Resulting
Bank or any of its affiliates  regarding the subject  matter  hereof,  including
without  limitation  the  terms  and  conditions  of  employment,  compensation,
benefits, retirement, competition following employment, and the like, are merged
into and superseded by this Agreement. Neither this Agreement nor any provisions
hereof  can  be




                                      -7-

<PAGE>

modified, changed,  discharged, or terminated except by an instrument in writing
signed by the party against whom any waiver, change,  discharge,  or termination
is sought.

         11.  Severability.  If any provision or  provisions  of this  Agreement
shall  be  held  to  be  invalid,  illegal,  or  unenforceable  for  any  reason
whatsoever:

         (a)  the  validity,  legality,  and  enforceability  of  the  remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this  Agreement  containing  any such  provision  held to be invalid,
illegal, or unenforceable) shall not in any way be affected or impaired thereby;
and

         (b) to the fullest  extent  possible,  the provisions of this Agreement
(including,  without  limitation,  each portion of any section of this Agreement
containing any such provisions held to be invalid,  illegal,  or  unenforceable)
shall  be  construed  so as to  give  effect  to the  intent  manifested  by the
provision held invalid, illegal, or unenforceable.

         12.  Arbitration.  Subject to the right of each party to seek  specific
performance  (which  right  shall not be subject to  arbitration),  if a dispute
arises out of or related to this Agreement,  or the breach thereof, such dispute
shall be referred to arbitration in accordance  with the Commercial  Arbitration
Rules of the American Arbitration  Association ("AAA"). A dispute subject to the
provisions  of this section will exist if either party  notifies the other party
in  writing  that a dispute  subject to  arbitration  exists  and  states,  with
reasonable  specificity,  the issue  subject to  arbitration  (the  "Arbitration
Notice").  The parties agree that, after the issuance of the Arbitration Notice,
the  parties  will try in good faith to resolve  the  dispute  by  mediation  in
accordance  with the Commercial  Rules of Arbitration of AAA between the date of
the  issuance  of the  Arbitration  Notice  and the date the  dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any  controversy  or claim  arising out of this  Agreement or the breach  hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction.  Any person serving
as a  mediator  or  arbitrator  must  have at least  ten  years'  experience  in
resolving  commercial  disputes through  arbitration.  In the event any claim or
dispute involves an amount in excess of $100,000,  either party may request that
the  matter  be heard by a panel of three  arbitrators;  otherwise  all  matters
subject to arbitration shall be heard and resolved by a single  arbitrator.  The
arbitrator  shall have the same power to compel the  attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United  States  District  Court judge  sitting in the
District of Colorado.  In the event of any arbitration,  each party shall have a
reasonable  right to  conduct  discovery  to the same  extent  permitted  by the
Federal  Rules  of  Civil  Procedure,  provided  that  such  discovery  shall be
concluded  within ninety days after the date the matter is set for  arbitration.
Any provision in this  Agreement to the contrary  notwithstanding,  this section
shall be governed by the Federal  Arbitration  Act and the parties  have entered
into this Agreement pursuant to such Act.

         13.  Costs of  Litigation.  In the event  litigation  is  commenced  to
enforce  any of the  provisions  hereof,  or to  obtain  declaratory  relief  in
connection  with any of the provisions  hereof,  the  prevailing  party shall be
entitled to recover  reasonable  attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action,  or right asserted in such litigation,  the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.



                                      -8-

<PAGE>


         14. Affiliation. A company will be deemed to be "affiliated" with Zions
Bancorp,  Resulting Bank, or the Bank according to the definition of "Affiliate"
set  forth  in Rule  12b-2  of the  General  Rules  and  Regulations  under  the
Securities Exchange Act of 1934, as amended.

         15.  Headings.  The section and  subsection  headings  herein have been
inserted  for  convenience  of  reference  only and  shall in no way  modify  or
restrict any of the terms or provisions hereof.

         IN  WITNESS  WHEREOF,  the  parties  hereto  executed  or  caused  this
Agreement to be executed as of the day and year first above written.

                                             BANK COLORADO, NATIONAL ASSOCIATION



Attest:                                      By:
       -----------------------                   ---------------------------



                                             [__________________________]



Witness:
          --------------------               ----------------------------










                                      -9-




<PAGE>




                                   EXHIBIT IX
                                   ----------

                            NON-COMPETITION AGREEMENT
                            -------------------------












<PAGE>




                            NON-COMPETITION AGREEMENT

         This NON-COMPETITION  AGREEMENT (the "Agreement") made and entered into
this [_____] day of [_______],  1998, by and between DALE DUNCAN  ("Duncan") and
BANK COLORADO,  NATIONAL  ASSOCIATION,  a national banking association organized
under the laws of the United States ("Resulting Bank")

                          W I T N E S S E T H  T H A T :

         WHEREAS, the Agreement and Plan of Reorganization (the "Plan") dated as
of May [____], 1998 by and among Zions Bancorporation, a Utah corporation having
its  principal  office  in Salt  Lake  City,  Utah  ("Zions  Bancorp"),  Val Cor
Bancorporation,  Inc., a Colorado  corporation  having its  principal  office in
Cortez, Colorado, Resulting Bank, Mountain Financial Holding Company, a Colorado
corporation  having  its  principal  office  in  Woodland  Park,  Colorado  (the
"Company"), and Mountain National Bank, a national banking association organized
under the laws of the United States (the "Bank"), provides that the Bank will be
merged with and into Resulting Bank;

         WHEREAS, Duncan is the Chairman of the Board and a Director of both the
Company and the Bank and is also a significant  shareholder  of the Company and,
therefore, indirectly, a significant shareholder of the Bank;

         WHEREAS,  Duncan  desires to transfer his shares to Zions  Bancorp and,
therefore, indirectly to Resulting Bank;

         WHEREAS,  the  transfer  of  such  shares  will  provide  to  Duncan  a
significant economic benefit which is of value to Duncan;

         WHEREAS,  the  personal  involvement  of  Duncan  with  the Bank as its
Chairman  of the Board has added value to the Bank,  for which Zions  Bancorp is
compensating the  shareholders of the Bank,  including  Duncan,  pursuant to the
Plan;

         WHEREAS,  Zions Bancorp and  Resulting  Bank desire that such shares be
transferred,  provided  that  Duncan  agrees to refrain  from  competition  with
Resulting Bank for the period prescribed herein;

         WHEREAS,  Duncan and  Resulting  Bank are desirous of entering into the
Agreement for such periods and upon the terms and  conditions  set forth herein;
and

         WHEREAS,  this  Agreement  is an  essential  component  of the Plan and
necessary to achieve the objectives of the  transactions  described in the Plan,
and section  4.14 of the Plan  contemplates  that Duncan will enter into such an
agreement  as a condition  to the  consummation  of the  transactions  described
therein.

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties agree as follows:





<PAGE>

         1.       Non-Competition.

         (a) Duncan  hereby  agrees  that from the  Commencement  Date until its
third anniversary, Duncan will not (i) engage in the banking business other than
on behalf of Zions  Bancorp or  Resulting  Bank or their  affiliates  within the
Market Area (as hereinafter  defined),  (ii) directly or indirectly own, manage,
operate,  control,  be employed by, or provide management or consulting services
in any  capacity to any firm,  corporation,  or other  entity  (other than Zions
Bancorp or Resulting Bank or their  affiliates)  engaged in the banking business
in the Market  Area,  or (iii)  directly  or  indirectly  solicit  or  otherwise
intentionally cause any employee, officer, or member of the respective Boards of
Directors of  Resulting  Bank or any of its  affiliates  to engage in any action
prohibited  under (i) or (ii) of this section 1(a);  provided that the ownership
by Duncan as an investor of not more than five percent of the outstanding shares
of stock of any corporation  whose stock is listed for trading on any securities
exchange  or is  quoted  on the  automated  quotation  system  of  the  National
Association of Securities Dealers, Inc., or the shares of any investment company
as defined in section 3 of the Investment Company Act of 1940, as amended, shall
not in itself constitute a violation of Duncan's  obligations under this section
1(a).

         (b) Duncan  acknowledges and agrees that irreparable injury will result
to  Resulting  Bank in the  event of a breach of any of the  provisions  of this
section 1 (the  "Designated  Provisions")  and that  Resulting Bank will have no
adequate  remedy at law with  respect  thereto.  Accordingly,  in the event of a
material breach of any Designated Provision,  and in addition to any other legal
or equitable remedy Resulting Bank may have, Resulting Bank shall be entitled to
the  entry  of  a  preliminary  and  permanent  injunction  (including,  without
limitation,  specific performance) by a court of competent  jurisdiction in Salt
Lake County,  Utah,  Teller  County,  Colorado,  or  elsewhere,  to restrain the
violation or breach thereof by Duncan or any  affiliates,  agents,  or any other
persons acting for or with Duncan in any capacity whatsoever, and Duncan submits
to the jurisdiction of such court in any such action.

         (c) It is the desire and intent of the parties that the  provisions  of
this  section 1 shall be enforced to the fullest  extent  permissible  under the
laws and public policies  applied in each  jurisdiction in which  enforcement is
sought.  Accordingly,  if any  particular  provision  of this section 1 shall be
adjudicated  to be  invalid or  unenforceable,  such  provision  shall be deemed
amended  to delete  therefrom  the  portion  thus  adjudicated  to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular  jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 1 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable,  provisions similar
hereto or other  provisions  so as to provide to Resulting  Bank, to the fullest
extent permitted by applicable law, the benefits intended by this section 1.

         (d) As used  herein,  "Market  Area" shall mean the counties of El Paso
and Teller, Colorado.

         2. Notices.  All notices,  consents,  waivers, or other  communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram,  by express courier,  or sent by registered or certified mail,  return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:


                                      -2-



<PAGE>

If to Resulting Bank:

         [________________________________]
         [________________________________]
         [________________________________]

         Attention:   Chief Executive Officer

With a required copy to:

         Brian D. Alprin, Esq.
         Duane, Morris & Heckscher LLP
         1667 K Street, N.W., Suite 700
         Washington, D.C.  20006

If to Duncan:

         Mr. Dale Duncan
         [________________________________]
         [________________________________]
         [________________________________]

All such  notices  shall be  deemed to have  been  given on the date  delivered,
transmitted, or mailed in the manner provided above.

         3. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.

         4. Governing Law. This Agreement shall be governed by,  construed,  and
enforced in accordance with the laws of the State of Utah, without giving effect
to the principles of conflict of law thereof.  The parties hereby designate Salt
Lake County,  Utah and Teller County,  Colorado to be proper  jurisdictions  and
venues for any suit or action arising out of this Agreement. Each of the parties
consents to personal  jurisdiction  in each of such venues for such a proceeding
and agrees that he or it may be served with  process in any action with  respect
to this  Agreement  or the  transactions  contemplated  thereby by  certified or
registered  mail,  return  receipt  requested,  or to its  registered  agent for
service  of  process  in the  state  of Utah or  Colorado.  Each of the  parties
irrevocably  and  unconditionally  waives  and  agrees,  to the  fullest  extent
permitted by law, not to plead any objection  that it may now or hereafter  have
to the  laying of venue or the  convenience  of the forum of any action or claim
with respect to this Agreement or the transactions  contemplated thereby brought
in the courts aforesaid.

         5.   Entire   Agreement.   This   Agreement   constitutes   the  entire
understanding  between  Resulting Bank and Duncan relating to the subject matter
hereof. Any previous agreements or understandings  between the parties hereto or
between Duncan and the Bank or any of its affiliates or Resulting Bank or any of
its affiliates regarding the subject matter hereof, including without limitation
the terms and  conditions of  employment,  compensation,  benefits,  retirement,
competition following  employment,  and the like, are merged into and superseded
by this  Agreement.  Neither this  Agreement  nor any  provisions  hereof can be


                                      -3-



<PAGE>

modified, changed,  discharged, or terminated except by an instrument in writing
signed by the party against whom any waiver, change,  discharge,  or termination
is sought.

         6. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever:

         (a)  the  validity,  legality,  and  enforceability  of  the  remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this  Agreement  containing  any such  provision  held to be invalid,
illegal, or unenforceable) shall not in any way be affected or impaired thereby;
and

         (b) to the fullest  extent  possible,  the provisions of this Agreement
(including,  without  limitation,  each portion of any section of this Agreement
containing any such provisions held to be invalid,  illegal,  or  unenforceable)
shall  be  construed  so as to  give  effect  to the  intent  manifested  by the
provision held invalid, illegal, or unenforceable.

         7.  Arbitration.  Subject to the right of each  party to seek  specific
performance  (which  right  shall not be subject to  arbitration),  if a dispute
arises out of or related to this Agreement,  or the breach thereof, such dispute
shall be referred to arbitration in accordance  with the Commercial  Arbitration
Rules of the American Arbitration  Association ("AAA"). A dispute subject to the
provisions  of this section will exist if either party  notifies the other party
in  writing  that a dispute  subject to  arbitration  exists  and  states,  with
reasonable  specificity,  the issue  subject to  arbitration  (the  "Arbitration
Notice").  The parties agree that, after the issuance of the Arbitration Notice,
the  parties  will try in good faith to resolve  the  dispute  by  mediation  in
accordance  with the Commercial  Rules of Arbitration of AAA between the date of
the  issuance  of the  Arbitration  Notice  and the date the  dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any  controversy  or claim  arising out of this  Agreement or the breach  hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction.  Any person serving
as a  mediator  or  arbitrator  must  have at least  ten  years'  experience  in
resolving  commercial  disputes through  arbitration.  In the event any claim or
dispute involves an amount in excess of $100,000,  either party may request that
the  matter  be heard by a panel of three  arbitrators;  otherwise  all  matters
subject to arbitration shall be heard and resolved by a single  arbitrator.  The
arbitrator  shall have the same power to compel the  attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United  States  District  Court judge  sitting in the
District of Colorado.  In the event of any arbitration,  each party shall have a
reasonable  right to  conduct  discovery  to the same  extent  permitted  by the
Federal  Rules  of  Civil  Procedure,  provided  that  such  discovery  shall be
concluded  within ninety days after the date the matter is set for  arbitration.
Any provision in this  Agreement to the contrary  notwithstanding,  this section
shall be governed by the Federal  Arbitration  Act and the parties  have entered
into this Agreement pursuant to such Act.

         8. Costs of Litigation. In the event litigation is commenced to enforce
any of the provisions hereof, or to obtain declaratory relief in connection with
any of the provisions  hereof, the prevailing party shall be entitled to recover
reasonable  attorney's  fees.  In the event this  Agreement  is  asserted in any
litigation  as a defense  to any  liability,  claim,  demand,  action,  cause of
action, or right asserted in such litigation,  the party prevailing on the issue
of that defense shall be entitled to recovery of reasonable attorney's fees.


                                      -4-



<PAGE>

         9. Affiliation.  A company will be deemed to be "affiliated" with Zions
Bancorp,  Resulting Bank, or the Bank according to the definition of "Affiliate"
set  forth  in Rule  12b-2  of the  General  Rules  and  Regulations  under  the
Securities Exchange Act of 1934, as amended.

         10.  Headings.  The section and  subsection  headings  herein have been
inserted  for  convenience  of  reference  only and  shall in no way  modify  or
restrict any of the terms or provisions hereof.

         IN  WITNESS  WHEREOF,  the  parties  hereto  executed  or  caused  this
Agreement to be executed as of the day and year first above written.

                                             BANK COLORADO, NATIONAL ASSOCIATION

Attest:                                      By:
        -----------------------                   ------------------------------


                                                         DALE DUNCAN





Witness:
         ----------------------                   ------------------------------




                                      -5-






                                                                       EXHIBIT 5

                          Duane, Morris & Heckscher LLP
                         1667 K Street, N.W., Suite 700
                           Washington, D.C. 2006-1608
                                 (202) 776-7800

                               September 16, 1998

Zions Bancorporation
Suite 1380
One South Main
Salt Lake City, Utah 84111

Gentlemen:

         We  have  acted  as  counsel  to  Zions  Bancorporation   ("Zions")  in
connection  with the  Agreement and Plan of  Reorganization  dated as of May 14,
1998,  among  Mountain  Financial  Holding  Company  (the  "Company"),  Mountain
National Bank (the "Bank"), Zions, Val Cor Bancorporation, Inc. ("Val Cor"), and
Vectra  Bank  Colorado,  National  Association  (successor-in-interest  to  Bank
Colorado,  National  Association) ("Vectra Bank"), a related Agreement of Merger
between the Company and Val Cor, and a related  Agreement of Merger  between the
Bank and Vectra Bank (collectively,  the "Plan of Reorganization"),  whereby the
Company  will be  merged  into  Val  Cor,  with  Val  Cor  being  the  surviving
corporation  (the  "Holding  Company  Merger")  and the Bank will be merged into
Vectra Bank, with Vectra Bank being the surviving entity (the "Bank Merger"; the
Holding Company Merger and the Bank Merger being referred to herein collectively
as the "Reorganization").  Upon consummation of the Reorganization,  the holders
of the outstanding  shares of Company Common Stock will receive in the aggregate
up to 608,000 shares (the "Shares") of Zions Common Stock,  no par value ("Zions
Common  Stock").  Upon the Effective Date of the  Reorganization,  the shares of
Company Common Stock will be canceled and  immediately  converted into the right
of holders of Company  Common  Stock to receive,  in exchange  for each share of
Company Common Stock, 12.16 shares of Zions Common Stock.

         We are  also  acting  as  counsel  to  Zions  in  connection  with  the
Registration Statement on Form S-4 (the "Registration Statement") to be filed by
Zions with the Securities and Exchange Commission for the purpose of registering
under the Securities Act of 1933, as amended,  the Shares into which outstanding
Company Common Stock will be converted upon effectiveness of the Reorganization.
This opinion is being  furnished for the purpose of being filed as an exhibit to
the Registrant Statement.

         In connection with this opinion, we have examined, among other things:

         (1)      an executed copy of the Plan of Reorganization

         (2)      a copy certified to our satisfaction of the Restated  Articles
                  of Incorporation of Zions as in effect on the date hereof;


<PAGE>



Zions Bancorporation
September 16, 1998
Page 2

         (3)      copies certified to our satisfaction of resolutions adopted by
                  the Board of Directors  of Zions on April 24, 1998,  including
                  resolutions  approving  the  Plan  of  Reorganization  and the
                  issuance of the Shares; and

         (4)      such other documents,  corporate proceedings,  and statutes as
                  we considered necessary to enable us to furnish this opinion.

         We have assumed for the purpose of this opinion that:

         (1)      the  Plan  of   Reorganization   has  been  duly  and  validly
                  authorized,  executed,  and  delivered  by the Company and the
                  Bank  to  the  extent  they  are  parties   thereto  and  such
                  authorization   remains  fully  effective  and  has  not  been
                  revised,  superseded  or  rescinded  as of the  date  of  this
                  opinion; and

         (2)      the Reorganization  will be consummated in accordance with the
                  terms of the Plan of Reorganization; and

         (3)      all   documents   which  must  be  submitted  and  filed  with
                  government  authorities to effectuate the Reorganization  will
                  be  so  submitted  and  filed  and  all  government  approvals
                  required by ss. 3.1 of the Plan of  Reorganization  shall have
                  been obtained.

         We have assumed the  authenticity  of all documents  submitted to us as
originals,  the  genuineness  of all  signatures,  the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies.  We have  assumed  that the  certifications  and  representations  dated
earlier than the date hereof on which we have expressed reliance herein continue
to remain accurate,  insofar as material to our opinions, from such earlier date
through the date hereof.

         Based upon the  foregoing,  we are of the opinion that the Shares to be
issued by Zions as  described  in the  Registration  Statement,  when and to the
extent issued in  accordance  with the Plan of  Reorganization,  will be legally
issued, fully paid and nonassessable.

         We hereby  consent to the  filing of this  opinion as an exhibit to the
Registration  Statement  and to the  reference  to us under the  caption  "Legal
Opinions" in the Proxy  Statement/Prospectus  forming a part of the Registration
Statement.

                                             Very truly yours,

                                             /s/ DUANE, MORRIS & HECKSCHER LLP




                                                                       EXHIBIT 8


                                   

     [AN OPINION SUBSTANTIALLY IN THE FORM BELOW WILL BE DELIVERED AT CLOSING OF
     THE TRANSACTION DESCRIBED HEREIN,  ASSUMING NO MATERIAL CHANGE IN THE FACTS
     OR LAW UPON WHICH SUCH OPINION IS BASED]


                   [DUANE, MORRIS & HECKSCHER LLP LETTERHEAD]


                               September 17, 1998


Board of Directors
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111

Board of Directors
Mountain Financial Holding Company
361 W. Highway 24
Woodland Park, Colorado 80866

          Re:  Proposed  Merger of Mountain  Financial  Holding Company with and
               into Val Cor Bancorporation, Inc. and Proposed Merger of Mountain
               National  Bank  with  and into  Vectra  Bank  Colorado,  National
               Association

Ladies and Gentlemen:

     We have  acted as  counsel  to  Zions  Bancorporation,  a Utah  corporation
("Zions  Bancorp") in connection  with the Agreement and Plan of  Reorganization
dated  as of May 14,  1998  (the  "Agreement"),  among  Zions  Bancorp,  Val Cor
Bancorporation,  Inc., a Colorado corporation ("Val Cor"), Vectra Bank Colorado,
National   Association   (successor-in-interest   to  Bank  Colorado,   National
Association),  a national  banking  association  organized under the laws of the
United  States  ("Vectra"),  Mountain  Financial  Holding  Company,  a  Colorado
corporation  (the  "Company"),  and Mountain  National Bank, a national  banking
association  organized  under the laws of the  United  States  (the  "Bank"),  a
related  Agreement  of Merger  between the  Company  and Val Cor,  and a related
Agreement  of Merger  between  the Bank and Vectra  (collectively,  the "Plan of
Reorganizations"),  whereby  the  Company  will be merged with and into Val Cor,
with Val Cor being the surviving  corporation (the "Holding Company Merger") and
the Bank will be merged


<PAGE>


Board of Directors
September 17, 1998
Page 2


with and into Vectra, with Vectra being the surviving entity (the "Bank Merger";
collectively  the  "Reorganizations").  Zions  Bancorp  owns all the  issued and
outstanding  capital  stock  of Val  Cor.  Val  Cor  owns  all  the  issued  and
outstanding  capital  stock of Vectra.  The  Company  owns all of the issued and
outstanding capital stock of the Bank.

     In accordance  with section 3.4 of the  Agreement,  this opinion  addresses
certain federal income tax consequences of the Reorganizations.

     Except as otherwise  defined  herein,  all terms  defined in the  Agreement
shall have the same meaning when used in this opinion.

     The elements of the Reorganizations are as follows:

     (1)  Pursuant  to the  Plan  of  Reorganizations,  the  Agreement  and  the
provisions  of section  7-111-101 et seq. of the Colorado  Business  Corporation
Act,  the  Company  will  merge  with and into Val Cor,  with Val Cor  being the
surviving  corporation  and, upon the Effective  Date,  each holder of shares of
outstanding  Company  Common Stock will  receive,  in exchange for each share of
Company Common Stock,  shares of Zions Bancorp  Stock,  that number of shares of
Zions Bancorp Stock calculated by dividing 608,000 by the total number of shares
of Company Common Stock issued and outstanding as of the Effective  Date.  Zions
Bancorp will not issue  fractional  shares of its stock.  In lieu of  fractional
shares of Zions Bancorp  Stock,  if any, each  shareholder of the Company who is
entitled to a fractional  share of Zions Bancorp Stock will receive an amount of
cash equal to the product of such fraction multiplied by $51.50. Such fractional
share interest will not include the right to vote or to receive dividends or any
interest thereon.

     (2)  Pursuant  to the  Plan  of  Reorganizations,  the  Agreement  and  the
provisions  of section 215a of the National Bank Act (12 U.S.C.  ss. 215a),  the
Bank will  merge  with and into the  Vectra,  with  Vectra  being the  surviving
corporation and the  outstanding  shares of the common stock of the Bank will be
canceled.


                                     *******


     In  rendering  our opinion,  we have  examined and relied upon but have not
independently verified the accuracy and completeness of the facts,  information,
covenants  and  representations   contained  in  the  Agreement,   the  Plan  of
Reorganizations  and  such  other  documents  as we  have  deemed  necessary  or
appropriate as a basis for our opinion. In addition, we have relied upon certain
representation  letters  furnished to us by Zions Bancorp,  Val Cor, the Company
and the Bank. A copy of these  letters is attached.  Where such  statements  and
representations  are made to the best  knowledge and belief of the person making
such statement or  representation,  we have assumed the facts to be as so stated
and  represented.  We  have  also  assumed  that  the  Reorganizations  will  be
consummated in accordance with the Agreement and the Registration


<PAGE>


Board of Directors
September 17, 1998
Page 3


Statement,   including  the  Proxy  Statement/Prospectus,   as  filed  with  the
Securities  and Exchange  Commission on Form S-4. Our opinion is  conditioned on
the initial and  continuing  accuracy  of such  facts,  information,  covenants,
representations,  statements and assumptions.  In addition,  we have assumed the
authenticity of all documents  submitted to us as originals,  the genuineness of
all signatures, the legal capacity of natural persons, and the conformity to the
originals of all documents submitted to us as copies.

     In rendering our opinion,  we have considered the applicable  provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder, pertinent judicial authorities, and interpretive rulings
as we have considered relevant.  Statutes,  regulations,  judicial decisions and
administrative  interpretations  are  subject to change at any time and, in some
circumstances,  with  retroactive  effect.  A material change in the authorities
upon which our opinion is based could affect our conclusions.


                                     *******


     Based solely upon the  foregoing,  we are of the opinion that under current
law for federal income tax purposes:

     (i) The Holding  Company  Merger will qualify as a  "reorganization"  under
Section 368(a)(1) of the Code. Zions Bancorp,  Val Cor and the Company will each
be a "party to the  reorganization"  within the meaning of Section 368(b) of the
Code;

     (ii) The  Company  will  recognize  no gain or loss  upon the  transfer  of
substantially  all of its assets to Val Cor in exchange for Zions  Bancorp Stock
and Val Cor's assumption of the liabilities of the Company  (sections 361(b) and
357(a) of the Code);

     (iii) No gain or loss will be recognized by either Zions Bancorp or Val Cor
upon  the  acquisition  by Val Cor of  substantially  all of the  assets  of the
Company  in  exchange  for  Zions  Bancorp  Stock,  and  the  assumption  of the
liabilities of the Company (Treas. Reg. Sec. 1.1032- 2(b));

     (iv) The basis of the Company's  assets in the hands of Val Cor will be the
same as the basis of those assets in the hands of the Company  immediately prior
to the Holding Company Merger (section 362(b) of the Code);

     (v) The holding  period of the  Company's  assets  received by Val Cor will
include the period during which such assets were held by the Company immediately
prior to the Holding Company Merger (section 1223(2) of the Code);


<PAGE>


Board of Directors
September 17, 1998
Page 4


     (vi) No gain or loss will be  recognized  by a  shareholder  of the Company
upon the  receipt  of Zions  Bancorp  Stock  solely in  exchange  for his or her
Company Common Stock (section 354(a)(1) of the Code);

     (vii) The basis of the Zions Bancorp Stock received by a shareholder of the
Company  pursuant to the Holding Company Merger  (including any fractional share
interest  to which that  shareholder  may be  entitled)  will be the same as the
basis of the Company Common Stock exchanged  therefor (section  358(a)(1) of the
Code);

     (viii)  The  holding  period  of the  Zions  Bancorp  Stock  received  by a
shareholder of the Company pursuant to the Holding Company Merger (including any
fractional  share  interest  to which that  shareholder  may be  entitled)  will
include  the holding  period of the Company  Common  Stock  exchanged  therefor,
provided the Company Common Stock is held as a capital asset by the  shareholder
on the Effective Date (section 1223(1) of the Code);

     (ix) A shareholder of the Company who receives cash in lieu of a fractional
share of Zions Bancorp Stock will recognize gain or loss equal to the difference
between the cash received and the shareholder's  basis in that fractional share,
and that gain or loss will be capital gain or loss if the fractional share would
have been a capital asset in the hands of the  shareholder  (Rev.  Rul.  66-365,
1966-2 C.B. 116; Rev. Proc. 77-41, 1977-2 C.B. 574); and

     (x)  Cash  received  by a  shareholder  of the  Company  who has  perfected
dissenters'  rights under the  provisions  of sections  7-113-101 et seq. of the
Colorado Business  Corporation Act as to his or her Company Common Stock will be
treated  as a  distribution  in  redemption  of  such  shares,  subject  to  the
provisions and limitations of Section 302 of the Code.


                                     *******


     Except as set forth above, we express no opinion as to the federal,  state,
local or foreign tax consequences of the Holding Company Merger, the Bank Merger
or of any transactions related thereto.  This opinion is solely for your benefit
and is not to be used,  quoted,  circulated or otherwise referred to without our
express written permission.

                                                    Very truly yours,





                                                                    EXHIBIT 23.1

               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
Zions Bancorporation:

We consent to the use of our report  dated  January 26, 1998 with respect to the
consolidated financial statements of Zions Bancorporation and subsidiaries as of
December 31, 1997 and 1996, and for each of the years in the  three-year  period
ended December 31, 1997 incorporated  herein by reference,  and to the reference
to our firm under the heading "Experts" in the Registration  Statement and Proxy
Statement/Prospectus.

                                                       /s/ KPMG PEAT MARWICK LLP

                                                       KPMG PEAT MARWICK LLP

Salt Lake City, Utah
September 16, 1998







                                                                    EXHIBIT 23.2

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent  public  accountants we hereby  consent to the  incorporation  by
reference  in this S-4  Registration  Statement of Zions  Bancorporation  of our
report dated January 16, 1998 on Sumitomo Bank of  California's  1997  financial
statements included in Zions  Bancorporation's  previously filed Form 8-K (filed
April 15, 1998) and to all references to our firm included in this  Registration
Statement.

                                                      /s/ ARTHUR ANDERSEN LLP
                                                      ARTHUR ANDERSEN LLP

San Francisco, California
_______________, 1998







                                                                    EXHIBIT 99.1

               [LETTERHEAD OF MOUNTAIN FINANCIAL HOLDING COMPANY]

                                 ________, 1998

Shareholders of Mountain Financial Holding Company

Dear Shareholder:

         The Board of  Directors  of Mountain  Financial  Holding  Company  (the
"Company") has called a Special  Meeting of the  shareholders of the Company for
9:00 a.m.,  Colorado  time, on _____,  1998, at the Company's  offices at 361 W.
Highway 24, Woodland Park,  Colorado.  The Board is furnishing the  accompanying
Proxy Statement/Prospectus to all holders of the Company's Common Stock.

         The  purpose of the  Special  Meeting is to  consider  and vote upon an
Agreement and Plan of Reorganization  dated May 14, 1998 among the Company,  its
wholly-owned   subsidiary   Mountain   National   Bank   (the   "Bank"),   Zions
Bancorporation   ("Zions"),   Val  Cor  Bancorporation,   Inc.  ("Val  Cor"),  a
wholly-owned subsidiary of Zions, and Vectra Bank Colorado, National Association
(successor-in-interest to Bank Colorado, National  Association)("Vectra  Bank"),
Val Cor's wholly-owned  subsidiary,  and Agreement of Merger between the Company
and Val Cor and an  Agreement  of  Merger  between  the  Bank  and  Vectra  Bank
(collectively,  the "Plan of Reorganization").  If the Plan of Reorganization is
approved  and all other  conditions  are met,  the Plan of  Reorganization  will
result  in the  merger  of the  Company  into Val Cor,  with Val Cor  being  the
surviving  corporation  and the merger of the Bank into Vectra Bank, with Vectra
Bank  being  the  surviving  national  banking  association  (collectively,  the
"Reorganization").

         THE  BOARD  OF  DIRECTORS   HAS   UNANIMOUSLY   APPROVED  THE  PLAN  OF
REORGANIZATION  AND DETERMINED THAT THE  REORGANIZATION IS IN THE BEST INTERESTS
OF THE COMPANY, ITS SHAREHOLDERS, ITS EMPLOYEES AND THE COMMUNITY IT SERVES. THE
BOARD OF DIRECTORS UNANIMOUSLY  RECOMMENDS THAT THE SHAREHOLDERS VOTE TO APPROVE
THE PLAN OF  REORGANIZATION.  PLEASE  MARK,  SIGN,  DATE AND RETURN THE ENCLOSED
PROXY AS SOON AS POSSIBLE.

         Upon consummation of the Reorganization, Zions will issue up to a total
of 608,000  shares of its Common  Stock to the  Company's  shareholders.  At the
Effective Date (as defined) of the Reorganization,  the shares of Company Common
Stock will be  canceled  and  immediately  converted  into the right for Company
shareholders  to receive 12.16 shares of Zions Common Stock in exchange for each
share of Company Stock.

         The  accompanying  Proxy  Statement/Prospectus  details  the  terms and
conditions  of the  propsed  Plan of  Reorganization  and  provides  information
concerning the Company,  the Bank, Zions, Val Cor and Vectra Bank as well as the
Plan  of  Reorganization.  The  Proxy  Statement/Prospectus  contains  important
information  necessary for the shareholders to make a decision about how to vote
at the Special Meeting. Please read it carefully.






<PAGE>



Shareholders of Mountain Financial Holding Company
____________, 1998
Page 2

         Any holder of Company  Common Stock may attend the Special  Meeting and
vote in person if he or she desires,  even if he or she has already  submitted a
proxy.

         Consummation  of the Plan of  Reorganization  is subject to approval by
federal and state bank  regulatory  agencies,  all of which  approvals have been
received,  and  to  certain  other  conditions,  including  maintenance  of  the
Company's financial condition. If approved, the Plan of Reorganization will most
likely be consummated sometime in the fourth quarter of 1998.

         Instructions  describing  the procedure  for receiving  shares of Zions
Common Stock are not included with the accompanying Proxy  Statement/Prospectus.
If the Plan of  Reorganization  is approved by the  shareholders,  on or shortly
after the  Effective  Date of the Plan of  Reorganization,  Zions  will send you
instructions  describing  the procedure for exchanging  your Mountain  Financial
Holding Company stock certificate for the Reorganization  consideration.  PLEASE
DO  NOT  SEND  YOUR  CERTIFICATES  TO  THE  COMPANY  PRIOR  TO  RECEIVING  THESE
INSTRUCTIONS.

                                          Sincerely,

                                          ---------------------
                                          James P.  Oaks

                                          President and Chief Executive Officer




                                                                    EXHIBIT 99.2

                       MOUNTAIN FINANCIAL HOLDING COMPANY

                            NOTICE OF SPECIAL MEETING
                                 OF SHAREHOLDERS

         A Special Meeting of shareholders of Mountain Financial Holding Company
(the "Company") will be held at 9:00 a.m., Colorado time, on ________,  1998, at
the Company's  offices at 361 W. Highway 24,  Woodland Park,  Colorado,  for the
following purposes:

         1.   To consider and vote upon an Agreement and Plan of  Reorganization
              dated as of May 14,  1998  among  the  Company,  its  wholly-owned
              subsidiary   Mountain   National   Bank   (the   "Bank"),    Zions
              Bancorporation  ("Zions"),  Val  Cor  Bankcorporation,  Inc.  "Val
              Cor"),  a  wholly-owned  subsidiary  of  Zions,  and  Vectra  Bank
              Colorado,   National   Association)  ("Vectra  Bank"),  Val  Cor's
              wholly-owned  subsidiary,  an  Agreement  of  Merger  between  the
              Company and Val Cor and an Agreement of Merger between Vectra Bank
              and the Bank (collectively, the "Plan of Reorganization"), and the
              transactions  contemplated  thereby.  The  Plan of  Reorganization
              provides for the merger of the Company into Val Cor,  with Val Cor
              being the  surviving  corporation,  and for the merger of the Bank
              into Vectra Bank,  with Vectra Bank being the  surviving  national
              banking  association,  as more fully described in the accompanying
              Proxy Statement/Prospectus.

         2. To  transact  such other  business as may  properly  come before the
Special Meeting.

         The Board of Directors has set ______________, 1998, as the record date
for  determining  shareholders  entitled to notice of and to vote at the Special
Meeting.

         Holders of Company  Common  Stock are  entitled  to assert  dissenters'
rights and to receive the fair value of their shares in cash if they comply with
certain  provisions  under  Colorado  law. A copy of the  applicable  statute is
attached to the Proxy  Statement/Prospectus.  Shareholders  desiring to exercise
dissenters' rights must comply strictly with the statutory provisions.

                                          By order of the Board of Directors,

                                          -----------------------------
                                          James P.  Oaks
                                          President and Chief Executive Officer

Dated: _________, 1998

         Please  mark,  sign and  return  the  enclosed  proxy  in the  envelope
provided.





                                                                    EXHIBIT 99.3

                                 REVOCABLE PROXY

                         SPECIAL MEETING OF SHAREHOLDERS
                      OF MOUNTAIN FINANCIAL HOLDING COMPANY

                                                   _______, 1998

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

         The undersigned  hereby appoints James P. Oaks and Charles A. Oaks, and
either of them, as proxies of the undersigned with full power of substitution to
vote as  designated  below  all  shares of Common  Stock of  Mountain  Financial
Holding Company  ("Company Common Stock") that the undersigned held of record on
______________,  1998,  at the  special  meeting  of  shareholders  of  Mountain
Financial  Holding Company (the  "Company") to be held on ____,  1998, or at any
postponement or adjournment thereof with respect to the following:

         1. A proposal to approve the Agreement and Plan of Reorganization dated
May 14, 1998, among the Company,  its wholly-owned  subsidiary Mountain National
Bank (the "Bank"), Zions Bancorporation ("Zions"), Val Cor Bancorporation,  Inc.
("Val Cor"),  a  wholly-owned  subsidiary  of Zions,  and Vectra Bank  Colorado,
National   Association   (successor-in-interest   to  Bank  Colorado,   National
Association)("Vectra  Bank"), Val Cor's wholly-owned subsidiary, an Agreement of
Merger between the Company and Val Cor and an Agreement of Merger between Vectra
Bank and the Bank  (collectively,  the "Plan of  Reorganization"),  whereby  the
Company will merge into Val Cor, with Val being the surviving  national  banking
association.  The terms and  conditions  of the Plan of  Reorganization  are set
forth in the accompanying Proxy Statement/Prospectus.

         [ ] FOR          [ ] AGAINST          [ ] ABSTAIN

         2. Other matters. The Proxyholder,  in his discretion, is authorized to
vote on such other business as may properly come before the Special  Meeting and
any adjournments thereof.

         THE BOARD OF  DIRECTORS  RECOMMENDS  A VOTE FOR  PROPOSAL 1. THE SHARES
REPRESENTED  BY  THIS  PROXY  WILL  BE  VOTED  AS  SPECIFIED  ABOVE  BUT  IF  NO
SPECIFICATION  IS MADE,  THIS  PROXY WILL BE VOTED FOR  APPROVAL  OF THE PLAN OF
REORGANIZATION.

Dated: _________, 1998                      ______________________________
                                                             Signature

                                            ------------------------------
[label]                                                      Printed Name

                                           Each  person  whose  name  is on  the
                                           Company   Common  Stock   certificate
                                           should  sign below in the same manner
                                           in which such  person's name appears.
                                           If  signing  as  a  fiduciary,   give
                                           title.  A  corporation  must sign its
                                           name  by  the   president   or  other
                                           authorized  officer.   All  co-owners
                                           must sign.




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