ZIONS BANCORPORATION /UT/ - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to


COMMISSION FILE NUMBER 0-2610

ZIONS BANCORPORATION

(Exact name of Registrant as specified in its charter)


UTAH		87-0227400

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


ONE SOUTH MAIN, SUITE 1134 SALT LAKE CITY, UTAH		84111

(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (801) 524-4787

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirement for the past 90 days. Yes x No¨

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock, without par value, outstanding at August 8, 2002

91,708,110 shares

ZIONS BANCORPORATION AND SUBSIDIARIES

INDEX

			Page
PART I.	FINANCIAL INFORMATION

ITEM 1.		Financial Statements (Unaudited)

		Consolidated Balance Sheets	3
		Consolidated Statements of Income	4
		Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income (Loss)	6
		Consolidated Statements of Cash Flows	7
		Notes to Consolidated Financial Statements	9

ITEM 2.		Management's Discussion and Analysis	15

ITEM 3.		Quantitative and Qualitative Disclosures about Market Risk	32

PART II.	OTHER INFORMATION

ITEM 4.		Submission of Matters to a Vote of Shareholders	32

ITEM 6.		Exhibits and Reports on Form 8-K	33

SIGNATURES			34

PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS (Unaudited)

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		June 30,	December 31,		June 30,
(In thousands, except share amounts)		2002	2001		2001

		(Unaudited)				(Unaudited)
ASSETS
Cash and due from banks	$	1,024,778	$	978,609	$	978,838
Money market investments:
Interest-bearing deposits		1,773		2,780		4,083
Federal funds sold		21,791		57,653		23,965
Security resell agreements		295,792		222,147		353,704
Investment securities:
Held to maturity, at cost (approximate market
value $108,859, $79,752, and $51,109)		107,748		79,546		51,109
Available for sale, at market		3,194,125		3,283,915		2,993,101
Trading account, at market (includes $236,344, $87,612, and
$167,487 transferred as collateral under repurchase agreements)		307,543		102,896		262,297

		3,609,416		3,466,357		3,306,507
Loans:
Loans held for sale		165,375		297,959		207,337
Loans, leases and other receivables		18,386,461		17,115,485		16,359,404

		18,551,836		17,413,444		16,566,741
Less:
Unearned income and fees, net of related costs		99,282		102,606		90,422
Allowance for loan losses		264,432		260,483		229,865

Net loans		18,188,122		17,050,355		16,246,454

Premises and equipment, net		366,169		368,076		350,715
Goodwill		736,524		770,763		731,176
Core deposit and other intangibles		100,003		109,148		94,845
Other real estate owned		13,814		10,302		10,925
Other assets		1,376,532		1,267,974		1,386,587

	$	25,734,714	$	24,304,164	$	23,487,799

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	4,667,661	$	4,480,669	$	4,142,821
Interest-bearing:
Savings and money market		10,657,877		9,507,817		9,193,595
Time under $100,000		1,865,214		2,055,087		2,072,538
Time $100,000 and over		1,505,089		1,664,829		1,666,965
Foreign		92,588		133,288		94,165

		18,788,429		17,841,690		17,170,084

Securities sold, not yet purchased		195,296		87,255		164,345
Federal funds purchased		935,959		1,203,764		819,437
Security repurchase agreements		889,520		933,973		1,132,907
Accrued liabilities		449,812		428,225		510,305
Commercial paper		338,986		309,000		352,632
Federal Home Loan Bank advances and other borrowings:
One year or less		772,422		181,266		265,275
Over one year		240,530		240,458		242,337
Long-term debt		763,700		781,342		616,681

Total liabilities		23,374,654		22,006,973		21,274,003


Minority interest		22,782		16,322		16,074

Shareholders' equity:
Capital stock:
Preferred stock, without par value; authorized
3,000,000 shares; issued and outstanding, none		-		-		-
Common stock, without par value; authorized 350,000,000
shares; issued and outstanding 91,701,887, 92,208,736, and 92,328,261 shares		1,072,005		1,111,214		1,120,991
Accumulated other comprehensive income		62,983		59,951		74,796
Retained earnings		1,202,290		1,109,704		1,001,935

Total shareholders' equity		2,337,278		2,280,869		2,197,722

	$	25,734,714	$	24,304,164	$	23,487,799

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Three Months Ended						Six Months Ended
(In thousands, except per share amounts)	June 30,						June 30,

	2002			2001			2002			2001

Interest income:
Interest and fees on loans	$	310,002		$	331,947		$	615,707		$	653,519
Interest on loans held for sale		2,191			3,158			4,927			6,242
Lease financing		5,134			5,897			10,802			10,917
Interest on money market investments		4,215			11,451			7,901			21,665
Interest on securities:
Held to maturity - taxable		1,494			796			2,292			1,781
Available for sale - taxable		33,500			40,904			68,128			89,880
Available for sale - nontaxable		6,665			6,059			13,007			12,123
Trading account		5,479			7,197			10,913			18,195

Total interest income		368,680			407,409			733,677			814,322

Interest expense:
Interest on savings and money market deposits		43,028			68,868			81,483			145,923
Interest on time and foreign deposits		28,862			52,883			62,252			99,413
Interest on borrowed funds		37,752			50,640			74,689			118,131

Total interest expense		109,642			172,391			218,424			363,467

Net interest income		259,038			235,018			515,253			450,855
Provision for loan losses		15,705			12,235			33,795			25,007

Net interest income after provision for loan losses		243,333			222,783			481,458			425,848

Noninterest income:
Service charges on deposit accounts		29,366			25,379			57,786			47,459
Loan sales and servicing income		19,348			22,177			26,274			41,772
Other service charges, commissions and fees		22,347			19,358			43,537			36,892
Trust income		5,165			4,655			9,578			9,430
Income from securities conduit		4,523			3,320			8,662			4,048
Underwriting, trading and nonhedge derivative income		8,466			6,867			23,901			20,909
Equity securities gains, net		563			2,038			1,184			29,892
Fixed income securities gains (losses), net		17			278			60			(4,098	)
Other		14,219			10,002			28,830			19,630

Total noninterest income		104,014			94,074			199,812			205,934

Noninterest expense:
Salaries and employee benefits		123,595			106,887			241,069			214,002
Occupancy, net		17,631			15,776			34,484			30,343
Furniture and equipment		16,059			14,650			32,421			28,906
Legal and professional services		7,441			6,320			14,093			13,935
Postage and supplies		6,969			7,355			14,178			13,382
Advertising		6,799			6,378			12,663			12,247
Merger related expense		-			734			-			3,271
Amortization of goodwill		-			8,903			-			16,045
Amortization of core deposit and other intangibles		4,574			3,253			9,145			5,819
Other		39,793			35,835			77,215			71,631

Total noninterest expense		222,861			206,091			435,268			409,581

Income before income taxes		124,486			110,766			246,002			222,201
Income taxes		42,986			38,954			85,021			80,092

Income before minority interest and cumulative
effect of change in accounting principle		81,500			71,812			160,981			142,109
Minority interest		(575	)		(1,783	)		(725	)		(3,387	)

Income before cumulative effect of change
in accounting principle		82,075			73,595			161,706			145,496
Cumulative effect of change in accounting principle, net of tax*		-			-			(32,369	)		(7,159	)

Net income	$	82,075		$	73,595		$	129,337		$	138,337

Income before cumulative effect, as adjusted*	$	82,075		$	82,250		$	161,706		$	161,246

Net income, as adjusted*	$	82,075		$	82,250		$	129,337		$	154,087

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
	Three Months Ended				Six Months Ended
(In thousands, except per share amounts)	June 30,				June 30,

	2002		2001		2002			2001


Weighted average common shares outstanding
during the period:
Basic shares		91,779		92,165		91,916			90,217
Diluted shares		92,629		93,210		92,658			91,339

Net income per common share:
Basic:
Income before cumulative effect of change
in accounting principle	$	0.89	$	0.80	$	1.76		$	1.61
Cumulative effect of change in accounting principle*		-		-		(0.35	)		(0.08	)

Net income	$	0.89	$	0.80	$	1.41		$	1.53

Income before cumulative effect, as adjusted*	$	0.89	$	0.89	$	1.76		$	1.79

Net income, as adjusted*	$	0.89	$	0.89	$	1.41		$	1.71


Diluted:
Income before cumulative effect of change
in accounting principle	$	0.89	$	0.79	$	1.75		$	1.59
Cumulative effect of change in accounting principle*		-		-		(0.35	)		(0.08	)

Net income	$	0.89	$	0.79	$	1.40		$	1.51

Income before cumulative effect, as adjusted*	$	0.89	$	0.88	$	1.75		$	1.77

Net income, as adjusted*	$	0.89	$	0.88	$	1.40		$	1.69

*	See Notes to Consolidated Financial Statements - “Business Combinations, Goodwill, and Other Intangible Assets.” For the six months ended June 30, 2001, the cumulative effect adjustment relates to the adoption of FASB Statement No. 133, net of income tax benefit of $4,521.

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)

	Six Months Ended June 30, 2002

	Accumulated Other Comprehensive
	Income (Loss)

				Net Unrealized
				Gains (Losses)			Net Unrealized
				on Investments			Gains (Losses)									Total
	Common			and Retained			on Derivative						Retained			Shareholders'
(In thousands)	Stock			Interests			Instruments			Subtotal			Earnings			Equity

Balance, January 1, 2002	$	1,111,214		$	31,774		$	28,177		$	59,951		$	1,109,704		$	2,280,869
Comprehensive income:
Net income for the period														129,337			129,337
Other comprehensive income:
Net realized and unrealized holding gains during
the period, net of income tax expense of $7,705					12,439						12,439
Reclassification for net realized gains recorded in
operations, net of income tax expense of $23					(37	)					(37	)
Net unrealized losses on derivative instruments,
net of reclassification to operations of $19,992
and income tax benefit of $5,804								(9,370	)		(9,370	)

Other comprehensive income (loss)					12,402			(9,370	)		3,032						3,032

Total comprehensive income																	132,369
Cash dividends--common, $.40 per share														(36,751	)		(36,751	)
Stock redeemed and retired		(56,461	)														(56,461	)
Stock options exercised, net of shares
tendered and retired		17,252															17,252

Balance, June 30, 2002	$	1,072,005		$	44,176		$	18,807		$	62,983		$	1,202,290		$	2,337,278

	Six Months Ended June 30, 2001

	Accumulated Other Comprehensive
	Income (Loss)

			Net Unrealized			Net Unrealized Gains on Derivative Instruments
			Gains (Losses)
			on Investments											Total Shareholders' Equity
	Common		and Retained								Retained
(In thousands)	Stock		Interests					Subtotal			Earnings

Balance, January 1, 2001	$	907,604	$	(3,644	)			$	(3,644	)	$	874,884		$	1,778,844
Comprehensive income:
Net income for the period												138,337			138,337
Other comprehensive income:
Net realized and unrealized holding gains during
the period, net of income tax expense of $19,311				31,175					31,175
Reclassification for net realized losses recorded in
operations, net of income tax benefit of $2,544				4,107					4,107
Net unrealized gains on derivative instruments,
net of reclassification to operations
of $4,936 and income tax expense of $5,347						$	8,633		8,633
Cumulative effect of change in accounting principle,
adoption of FASB Statement No. 133, net of
income tax expense of $21,245				13,259			21,266		34,525

Other comprehensive income				48,541			29,899		78,440						78,440

Total comprehensive income															216,777
Cash dividends--common, $.40 per share												(36,985	)		(36,985	)
Issuance of common shares for acquisitions		199,671										25,699			225,370
Stock options exercised, net of shares
tendered and retired		13,716													13,716

Balance, June 30, 2001	$	1,120,991	$	44,897		$	29,899	$	74,796		$	1,001,935		$	2,197,722

Total comprehensive income for the three months ended June 30, 2002 and 2001 was $93,358 and $90,406, respectively.

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended						Six Months Ended
(In thousands)	June 30,						June 30,

	2002			2001			2002			2001

Cash flows from operating activities:
Net income	$	82,075		$	73,595		$	129,337		$	138,337
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Cumulative effect of change in accounting principle, net of tax		–			–			32,369			7,159
Provision for loan losses		15,705			12,235			33,795			25,007
Depreciation of premises and equipment		14,994			13,775			30,127			26,809
Amortization		11,437			17,138			21,380			28,999
Accretion of unearned income and fees, net of related costs		(3,975	)		6,629			(3,324	)		3,228
Loss to minority interest		(575	)		(1,783	)		(725	)		(3,387	)
Fixed income securities losses (gains), net		(17	)		(278	)		(60	)		4,098
Equity securities gains, net		(563	)		(2,038	)		(1,184	)		(29,892	)
Proceeds from sales of trading account securities		56,085,237			45,880,052			120,905,430			92,052,614
Increase in trading account securities		(56,108,472	)		(45,816,025	)		(121,110,077	)		(92,030,877	)
Proceeds from loans held for sale		141,458			147,509			258,448			256,850
Increase in loans held for sale		(100,075	)		(144,192	)		(125,864	)		(283,028	)
Net gains on sales of loans, leases and other assets		(13,431	)		(15,845	)		(12,735	)		(28,902	)
Change in accrued income taxes		(31,100	)		72,314			5,817			88,534
Change in accrued interest receivable		(10,331	)		11,585			15,731			16,799
Change in other assets		(126,011	)		(31,898	)		(142,144	)		(249,942	)
Change in other liabilities		90,939			(285,555	)		11,196			58,246
Change in accrued interest payable		(8,478	)		(1,558	)		4,023			(12,192	)
Other, net		(1,043	)		(2,957	)		824			18,546

Net cash provided by (used in) operating activities		37,774			(67,297	)		52,364			87,006


Cash flows from investing activities:
Net decrease (increase) in money market investments		11,735			654,450			(36,776	)		227,215
Proceeds from maturities of investment securities
held to maturity		233			450			1,209			1,246
Purchases of investment securities held to maturity		(29,400	)		–			(29,400	)		–
Proceeds from sales of investment securities
available for sale		1,845,015			459,953			6,969,548			1,592,520
Proceeds from maturities of investment securities available for sale		774,309			1,245,045			972,180			2,112,386
Purchases of investment securities available for sale		(2,655,852	)		(1,297,866	)		(7,832,592	)		(2,431,984	)
Proceeds from sales of loans and leases		297,062			259,850			474,922			483,651
Net increase in loans and leases		(946,394	)		(1,029,541	)		(1,792,219	)		(1,419,994	)
Payments on leveraged leases		–			–			(5,585	)		(4,870	)
Principal collections on leveraged leases		–			–			5,585			4,870
Proceeds from sales of premises and equipment		4,526			1,903			5,340			2,182
Purchases of premises and equipment		(14,939	)		(26,512	)		(33,611	)		(48,320	)
Proceeds from sales of other assets		8,547			5,953			12,714			8,226
Cash received for acquisitions, net of cash paid		–			171,710			–			264,039
Cash paid for net liabilities on branches sold,
net of cash received		(48,678	)		–			(68,352	)		–

Net cash provided by (used in) investing activities		(753,836	)		445,395			(1,357,037	)		791,167

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)

	Three Months Ended						Six Months Ended
(In thousands)	June 30,						June 30,

	2002			2001			2002			2001

Cash flows from financing activities:
Net increase (decrease) in deposits	$	788,087		$	(122,955	)	$	1,029,578		$	389,949
Net change in short-term funds borrowed		104,431			(507,972	)		416,925			(1,492,387	)
Proceeds from FHLB advances over one year		–			100,000			1,500			100,000
Payments on FHLB advances over one year		(689	)		(21,324	)		(1,428	)		(22,069	)
Proceeds from issuance of long-term debt		–			200,000			–			201,914
Payments on long-term debt		(17,473	)		(32,362	)		(17,642	)		(32,640	)
Cash paid to reaquire minority interest		–			(66,044	)		–			(66,044	)
Proceeds from issuance of common stock		9,382			8,799			15,121			11,675
Payments to redeem common stock		(31,159	)		–			(56,461	)		–
Dividends paid		(18,350	)		(18,527	)		(36,751	)		(36,985	)

Net cash provided by (used in) financing activities		834,229			(460,385	)		1,350,842			(946,587	)

Net increase (decrease) in cash and due from banks		118,167			(82,287	)		46,169			(68,414	)
Cash and due from banks at beginning of period		906,611			1,061,125			978,609			1,047,252

Cash and due from banks at end of period	$	1,024,778		$	978,838		$	1,024,778		$	978,838


Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	131,673		$	173,809		$	213,309		$	372,430
Income taxes		80,175			13,813			81,960			25,674
Loans transferred to other real estate owned		8,851			7,685			16,544			8,286

ZIONS BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

June 30, 2002

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current financial statement presentation.

Operating results for the three- and six-month periods ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The balance sheet at December 31, 2001 is from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Zions Bancorporation’s Annual Report on Form 10-K for the year ended December 31, 2001.

BUSINESS COMBINATIONS, GOODWILL, AND OTHER INTANGIBLE ASSETS

Financial Accounting Standards Board (“FASB”) Statement No. 141, Business Combinations, became effective for the Company for business combinations completed after June 30, 2001. Statement No. 141 supersedes certain previous accounting guidance on business combinations, and eliminates the pooling-of-interest method of accounting. There were no acquisitions during the six months ended June 30, 2002.

FASB Statement No. 142, Goodwill and Other Intangible Assets, became effective for the Company beginning January 1, 2002. Under this Statement, goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to specified annual impairment tests. Other intangible assets are amortized over their useful lives.

ZIONS BANCORPORATION AND SUBSIDIARIES

Transitional disclosures under Statement No. 142 to reconcile prior period amounts of income before cumulative effect and net income to their respective adjusted amounts for the add back of goodwill amortization are as follows (in thousands, except per share amounts):

					Earnings per Share

					Basic				Diluted
	Three Months Ended
	June 30,				Three Months Ended June 30,

	2002		2001		2002		2001		2002		2001

Income before cumulative effect of change in accounting principle	$	82,075	$	73,595	$	0.89	$	0.80	$	0.89	$	0.79
Add back of goodwill amortization, net of income tax benefit				8,655				0.09				0.09

Income before cumulative effect, as adjusted	$	82,075	$	82,250	$	0.89	$	0.89	$	0.89	$	0.88


Net income	$	82,075	$	73,595	$	0.89	$	0.80	$	0.89	$	0.79

Add back of goodwill amortization, net of income tax benefit				8,655				0.09				0.09

Net income, as adjusted	$	82,075	$	82,250	$	0.89	$	0.89	$	0.89	$	0.88


					Earnings per Share

					Basic				Diluted
	Six Months Ended
	June 30,				Six Months Ended June 30,

	2002		2001		2002		2001		2002		2001

Income before cumulative effect of change in accounting principle	$	161,706	$	145,496	$	1.76	$	1.61	$	1.75	$	1.59
Add back of goodwill amortization, net of income tax benefit				15,750				0.18				0.18

Income before cumulative effect, as adjusted	$	161,706	$	161,246	$	1.76	$	1.79	$	1.75	$	1.77


Net income	$	129,337	$	138,337	$	1.41	$	1.53	$	1.40	$	1.51
Add back of goodwill amortization, net of income tax benefit				15,750				0.18				0.18

Net income, as adjusted	$	129,337	$	154,087	$	1.41	$	1.71	$	1.40	$	1.69

Changes in the carrying amount of goodwill for the six months ended June 30, 2002 by operating segment are as follows (in thousands):

	Zions First			California			Nevada State		National		Vectra			The Commerce
	National Bank			Bank &			Bank and		Bank		Bank			Bank of					Consolidated
	and Subsidiaries			Trust			Subsidiaries		of Arizona		Colorado			Washington		Other			Company

Balance as of January 1, 2002	$	11,533		$	387,387		$	21,051	$	57,168	$	239,232		$	–	$	54,392		$	770,763
Impairment losses		–			–			–		–		–			–		(35,045	)		(35,045	)
Goodwill written off from sale of branches		–			(1,082	)		–		–		–			–		–			(1,082	)
Goodwill pushdown from parent		7,989			–			–		1,142		16			–		(9,147	)		–
Other adjustments, including contingent consideration paid		(20	)		(474	)		–		445		(46	)		–		1,983			1,888

Balance as of June 30, 2002	$	19,502		$	385,831		$	21,051	$	58,755	$	239,202		$	–	$	12,183		$	736,524

ZIONS BANCORPORATION AND SUBSIDIARIES

During the second quarter, the Company completed all goodwill impairment testing required under the transitional provisions of Statement No. 142. The impairment losses indicated above, net of income tax benefit of $2.7 million, were recognized during the six months ended June 30, 2002 as a cumulative effect of a change in accounting principle in accordance with Statement No. 142. This adjustment relates to the impairment in carrying value of the Company’s investments in certain e-commerce subsidiaries included in the “Other” operating segment. The impairment amount was determined as of January 1, 2002 by comparing the carrying value of these subsidiaries to their fair value, which was estimated from comparable market values including price-to-revenue multiples.

The accompanying financial statements include the following restatement of the Company’s first quarter financial statements as required by Statement No. 142 for the cumulative effect adjustment (in thousands, except per share amounts):

	Consolidated Balance Sheets

	March 31, 2002

	As reported			Adjustments			As restated

Assets
Goodwill		$	769,379	$	(35,045	)		$	734,334
Total assets			24,839,623		(35,045	)			24,804,578

Liabilities and shareholders' equity
Accrued liabilities			452,999		(2,676	)			450,323
Retained earnings			1,170,934		(32,369	)			1,138,565
Total liabilities and shareholders' equity			24,839,623		(35,045	)			24,804,578

	Consolidated Statements of Income

	Three Months Ended March 31, 2002

	As reported			Adjustments			As restated

Cumulative effect of change in accounting principle, net of tax		$	-	$	(32,369	)		$	(32,369	)
Net income			79,631		(32,369	)			47,262
Net income per common share:
Basic		$	0.87	$	(0.35	)		$	0.52
Diluted			0.86		(0.35	)			0.51

EXCHANGE OF INTEREST IN SUBSIDIARY

On April 30, 2002, the Company finalized the exchange of its interest in Digital Signature Trust Co., a subsidiary of Zions First National Bank engaged in e-commerce digital certification, to Identrus, LLC (a corporate joint venture), for an approximate 33% ownership in Identrus. No gain or loss was recognized in the financial statements.

ZIONS BANCORPORATION AND SUBSIDIARIES

OPERATING SEGMENT INFORMATION

The Company manages its operations and prepares management reports with a primary focus on geographical area. All segments presented, except for the segment defined as “Other,” are based on commercial banking operations. Zions First National Bank and subsidiaries operates 128 branches in Utah and 22 in Idaho. California Bank & Trust operates 92 branches in Northern and Southern California. Nevada State Bank and subsidiaries operates 61 offices in Nevada. National Bank of Arizona operates 47 branches in Arizona. Vectra Bank Colorado operates 57 branches in Colorado and one branch in New Mexico. The Commerce Bank of Washington operates one branch in the state of Washington. The operating segment defined as “Other” includes the parent company, certain e-commerce subsidiaries, other smaller nonbank operating units, and eliminations of transactions between segments.

The accounting policies of the individual segments are the same as those of the Company. The Company allocates centrally provided services to the business segments based upon estimated usage of those services. Commencing January 1, 2002, the Company began transfer pricing on a consolidated company level. Allocated transfer pricing (expense) income included in net interest income of the banking subsidiaries for the three- and six-month periods ended June 30, 2002, respectively, are as follows: Zions First National Bank - $(13.3) and $(24.6) million, Nevada State Bank - $2.8 and 6.2 million, National Bank of Arizona - $3.3 and $5.1 million, Vectra Bank Colorado - $6.0 and $11.2 million, and The Commerce Bank of Washington - $1.2 and $2.1 million. Also, for consistency between periods, net income of each segment for the three- and six-month periods ended June 30, 2001 has been adjusted for the add back of goodwill amortization following the adoption of FASB Statement No. 142 in 2002.

ZIONS BANCORPORATION AND SUBSIDIARIES

The following table presents selected operating segment information for the three months ended June 30, 2002 and 2001:

	Zions First									Nevada State
	National Bank					California				Bank and						National Bank
(In millions)	and Subsidiaries					Bank & Trust				Subsidiaries						of Arizona

	2002			2001		2002		2001		2002			2001			2002			2001

CONDENSED INCOME STATEMENT
Net interest income	$	70.7		$	69.6	$	96.1	$	86.9	$	31.0		$	28.9		$	29.8		$	26.0
Provision for loan losses		8.0			6.0		4.5		0.7		1.2			2.5			0.4			0.3
Noninterest income		57.1			53.1		19.7		16.6		7.3			5.5			5.3			4.2
Merger expense and amortization of goodwill, core deposit and other intangibles		0.3			0.7		1.9		6.6		0.1			0.3			0.4			0.9
Other noninterest expense		77.6			70.5		56.8		57.9		20.9			19.8			16.9			15.8
Income tax expense (benefit)		14.0			15.1		21.2		16.8		5.4			4.0			6.9			5.3
Minority interest		(0.2	)		-		-		-		-			-			-			-
Add back of goodwill amortization		-			0.2		-		4.3		-			0.3			-			0.5

Net income (loss), as adjusted	$	28.1		$	30.6	$	31.4	$	25.8	$	10.7		$	8.1		$	10.5		$	8.4


AVERAGE BALANCE SHEET DATA
Total assets	$	10,294		$	9,011	$	8,624	$	8,064	$	2,565		$	2,363		$	2,620		$	2,516
Net loans and leases		6,646			5,489		5,749		5,545		1,624			1,371			1,826			1,760
Total deposits		6,011			4,386		6,712		6,736		2,231			2,041			2,214			2,127


						The Commerce
	Vectra Bank					Bank of										Consolidated
(In millions)	Colorado					Washington				Other						Company

		2002			2001		2002		2001		2002			2001			2002			2001

CONDENSED INCOME STATEMENT
Net interest income	$	28.9		$	21.3	$	6.2	$	5.7	$	(3.7	)	$	(3.4	)	$	259.0		$	235.0
Provision for loan losses		1.5			2.2		0.1		0.6		-			(0.1	)		15.7			12.2
Noninterest income		7.8			6.4		0.5		0.4		6.3			7.7			104.0			93.9
Merger expense and amortization of goodwill, core deposit and other intangibles		0.6			3.2		-		-		1.2			1.0			4.5			12.7
Other noninterest expense		24.3			19.9		2.7		2.6		19.1			6.7			218.3			193.2
Income tax expense (benefit)		3.7			1.6		1.4		1.0		(9.6	)		(4.8	)		43.0			39.0
Minority interest		-			-		-		-		(0.4	)		(1.8	)		(0.6	)		(1.8	)
Add back of goodwill amortization		-			2.6		-		-		-			0.8			-			8.7

Net income (loss), as adjusted	$	6.6		$	3.4	$	2.5	$	1.9	$	(7.7	)	$	4.1		$	82.1		$	82.3


AVERAGE BALANCE SHEET DATA
Total assets	$	2,580		$	2,261	$	549	$	516	$	(1,103	)	$	(1,014	)	$	26,129		$	23,717
Net loans and leases		1,832			1,536		310		257		96			72			18,083			16,030
Total deposits		1,720			1,410		390		362		(1,060	)		(96	)		18,218			16,966

ZIONS BANCORPORATION AND SUBSIDIARIES

The following table presents selected operating segment information for the six months ended June 30, 2002 and 2001:

		Zions First											Nevada State
		National Bank						California					Bank and					National Bank
(In millions)		and Subsidiaries						Bank & Trust					Subsidiaries					of Arizona

	2002			2001			2002		2001			2002		2001			2002		2001

CONDENSED INCOME STATEMENT
Net interest income	$	146.6		$	138.9		$	188.7	$	158.2		$	62.9	$	56.6		$	57.0	$	50.2
Provision for loan losses		19.3			11.7			8.5		1.5			2.2		5.0			1.0		0.9
Noninterest income		107.3			117.5			40.6		49.7			14.1		11.8			10.1		7.8
Merger expense and amortization of goodwill, core deposit and other intangibles		0.6			2.6			3.8		11.7			0.2		0.7			0.8		1.4
Other noninterest expense		149.9			137.8			114.3		110.6			40.9		39.7			32.5		30.2
Income tax expense (benefit)		28.1			35.0			41.7		36.6			11.4		7.8			13.0		10.2
Minority interest		(0.2	)		(0.7	)		-		-			-		-			-		-
Cumulative effect of change in accounting principle		-			(5.3	)		-		(1.3	)		-		(0.6	)		-		-
Add back of goodwill amortization		-			0.3			-		7.3			-		0.5			-		0.7

Net income (loss), as adjusted	$	56.2		$	65.0		$	61.0	$	53.5		$	22.3	$	15.1		$	19.8	$	16.0


AVERAGE BALANCE SHEET DATA
Total assets	$	10,153		$	8,888		$	8,486	$	7,402		$	2,527	$	2,355		$	2,610	$	2,231
Net loans and leases		6,456			5,301			5,733		5,191			1,590		1,374			1,815		1,629
Total deposits		5,652			4,307			6,723		6,150			2,186		2,025			2,197		1,875

						The Commerce
		Vectra Bank				Bank of										Consolidated
(In millions)		Colorado				Washington				Other						Company

	2002		2001		2002		2001		2002			2001			2002			2001

CONDENSED INCOME STATEMENT
Net interest income	$	56.1	$	42.9	$	11.7	$	11.1	$	(7.8	)	$	(7.1	)	$	515.2		$	450.8
Provision for loan losses		2.4		5.2		0.4		0.8		-			(0.1	)		33.8			25.0
Noninterest income		15.2		12.1		0.9		0.8		11.6			6.0			199.8			205.7
Merger expense and amortization of goodwill, core deposit and other intangibles		1.2		6.4		-		-		2.5			2.1			9.1			24.9
Other noninterest expense		48.9		38.8		5.2		5.0		34.4			22.3			426.1			384.4
Income tax expense (benefit)		6.6		3.2		2.5		2.1		(18.3	)		(14.8	)		85.0			80.1
Minority interest		-		-		-		-		(0.5	)		(2.7	)		(0.7	)		(3.4	)
Cumulative effect of change in accounting principle		-		-		-		-		(32.4	)		-			(32.4	)		(7.2	)
Add back of goodwill amortization		-		5.2		-		-		-			1.8			-			15.8

Net income (loss), as adjusted	$	12.2	$	6.6	$	4.5	$	4.0	$	(46.7	)	$	(6.1	)	$	129.3		$	154.1


AVERAGE BALANCE SHEET DATA
Total assets	$	2,584	$	2,213	$	536	$	519	$	(991	)	$	(678	)	$	25,905		$	22,930
Net loans and leases		1,827		1,511		299		247		93			65			17,813			15,318
Total deposits		1,719		1,403		380		368		(909	)		(79	)		17,948			16,049

ZIONS BANCORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL HIGHLIGHTS
(Unaudited)

	Three Months Ended								Six Months Ended
(In thousands, except per share and ratio data)	June 30,								June 30,

	2002			2001			% Change		2002			2001			% Change

EARNINGS									(Adjusted)(3)
Taxable-equivalent net interest income	$	264,282		$	240,151		10.05	%	$	525,587		$	460,860		14.04	%
Net interest income		259,038			235,018		10.22	%		515,253			450,855		14.28	%
Noninterest income		104,014			94,074		10.57	%		199,812			205,934		(2.97	)%
Provision for loan losses		15,705			12,235		28.36	%		33,795			25,007		35.14	%
Noninterest expense		222,861			206,091		8.14	%		435,268			409,581		6.27	%
Income before income taxes		124,486			110,766		12.39	%		246,002			222,201		10.71	%
Income taxes		42,986			38,954		10.35	%		85,021			80,092		6.15	%
Minority interest		(575	)		(1,783	)	(67.75	)%		(725	)		(3,387	)	(78.59	)%
Cumulative effect of change in accounting principle		-			-					(32,369	)		(7,159	)	352.14	%
Net income		82,075			73,595		11.52	%		129,337			138,337		(6.51	)%
Income before cumulative effect, as adjusted (1)		82,075			82,250		(0.21	)%		161,706			161,246		0.29	%
Net income, as adjusted (1)		82,075			82,250		(0.21	)%		129,337			154,087		(16.06	)%

PER COMMON SHARE
Net income (diluted)		0.89			0.79		12.66	%		1.40			1.51		(7.28	)%
Income before cumulative effect, as adjusted (1)		0.89			0.88		1.14	%		1.75			1.77		(1.13	)%
Net income (diluted), as adjusted (1)		0.89			0.88		1.14	%		1.40			1.69		(17.16	)%
Dividends		0.20			0.20		-			0.40			0.40		-
Book value										25.49			23.80		7.10	%

SELECTED RATIOS (1)
Return on average assets		1.26	%		1.39	%				1.01	%		1.36	%
Return on average common equity		14.21	%		15.28	%				11.37	%		15.37	%
Efficiency ratio		60.51	%		59.00	%				60.00	%		59.02	%
Net interest margin		4.61	%		4.63	%				4.65	%		4.62	%

OPERATING CASH EARNINGS (2)
Taxable-equivalent net interest income	$	264,282		$	240,151		10.05	%	$	525,587		$	460,860		14.04	%
Net interest income		259,038			235,018		10.22	%		515,253			450,855		14.28	%
Noninterest income		104,014			94,074		10.57	%		200,894			205,934		(2.45	)%
Provision for loan losses		15,705			12,235		28.36	%		33,795			25,007		35.14	%
Noninterest expense		218,287			193,201		12.98	%		426,123			384,446		10.84	%
Income before income taxes		129,060			123,656		4.37	%		256,229			247,336		3.60	%
Income taxes		44,859			40,805		9.94	%		88,724			83,902		5.75	%
Minority interest		(575	)		(1,783	)	(67.75	)%		(725	)		(3,187	)	(77.25	)%
Net income before cumulative effect of change in accounting principle		84,776			84,634		0.17	%		168,230			166,621		0.97	%

PER COMMON SHARE
Net income (diluted)		0.92			0.91		1.10	%		1.82			1.82		-
Dividends		0.20			0.20		-			0.40			0.40		-
Book value										16.37			14.86		10.16	%

SELECTED RATIOS
Return on average assets		1.34	%		1.48	%				1.35	%		1.51	%
Return on average common equity		22.99	%		25.04	%				23.34	%		25.82	%
Efficiency ratio		59.27	%		57.81	%				58.66	%		57.66	%
Net interest margin		4.61	%		4.63	%				4.65	%		4.62	%


(1)	Adjusted according to FASB Statement No. 142 for the add back of 2001 goodwill amortization, net of income tax benefit.
(2)	Before amortization of goodwill in prior period, amortization of core deposit and other intangible assets, merger expense, goodwill allocated to the carrying value of branches sold and the cumulative effect of the the adoption of FASB Statements No. 133 and 142.
(3)	Adjusted according to FASB Statement No. 142 for the impairment to goodwill and reflected as a cumulative effect adjustment, net of income tax benefit.

ZIONS BANCORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)

	Three Months Ended						Six Months Ended
(In thousands, except share and ratio data)	June 30,						June 30,

	2002		2001		% Change		2002		2001		% Change


AVERAGE BALANCES
Total assets	$	26,128,886	$	23,717,349	10.17	%	$	25,905,200	$	22,930,070	12.97	%
Securities		3,901,341		3,698,320	5.49	%		3,990,091		3,889,179	2.59	%
Net loans and leases		18,083,224		16,030,368	12.81	%		17,812,584		15,317,892	16.29	%
Goodwill		735,622		697,978	5.39	%		735,409		633,192	16.14	%
Core deposit and other intangibles		102,544		104,960	(2.30)	%		104,860		87,000	20.53	%
Total deposits		18,217,798		16,966,059	7.38	%		17,947,954		16,048,889	11.83	%
Minority interest		21,354		28,574	(25.27)	%		19,958		41,073	(51.41)	%
Shareholders' equity		2,317,029		2,158,613	7.34	%		2,293,991		2,021,357	13.49	%

Weighted average common and common-
equivalent shares outstanding		92,628,770		93,210,378	(0.62)	%		92,658,111		91,338,796	1.44	%

AT PERIOD END
Total assets								25,734,714		23,487,799	9.57	%
Securities								3,609,416		3,306,507	9.16	%
Net loans and leases								18,452,554		16,476,319	11.99	%
Sold loans being serviced (1)								2,543,887		1,794,063	41.79	%
Allowance for loan losses								264,432		229,865	15.04	%
Goodwill								736,524		731,176	0.73	%
Core deposit and other intangibles								100,003		94,845	5.44	%
Total deposits								18,788,429		17,170,084	9.43	%
Minority interest								22,782		16,074	41.73	%
Shareholders' equity								2,337,278		2,197,722	6.35	%

Common shares outstanding								91,701,887		92,328,261	(0.68)	%

Average equity to average assets		8.87	%	9.10	%			8.86	%	8.82	%
Common dividend payout		22.36	%	25.17	%			28.41	%	26.74	%
Nonperforming assets								115,513		87,500	32.01	%
Loans past due 90 days or more								32,332		40,750	(20.66)	%
Nonperforming assets to net loans and leases,
other real estate owned and other
nonperforming assets at period end								0.63	%	0.53	%

(1)	Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans.

ZIONS BANCORPORATION AND SUBSIDIARIES

OPERATING RESULTS

Zions Bancorporation and subsidiaries (“the Company”) achieved net income of $82.1 million, or $0.89 per diluted share for the second quarter of 2002, an increase of 11.5% and 12.7%, respectively, over the $73.6 million, or $0.79 per diluted share in the second quarter of 2001. Net income for the second quarter of 2001, adjusted for the add back of goodwill amortization under Financial Accounting Standards Board (“FASB”) Statement No. 142, was $82.3 million, or $0.88 per diluted share. Comparing the equivalent amount in the second quarter of 2002 to this adjusted amount in 2001 reflects a 0.21% decrease in net income and a 1.1% increase per share. All references hereinafter to prior periods are on an “as adjusted” basis for the add back of goodwill amortization under FASB Statement No. 142.

For the first six months of 2002, net income was $129.3 million or $1.40 per diluted share, compared to $154.1 million or $1.69 per diluted share for the first six months of 2001. The 2002 amounts include impairment losses of $32.4 million, net of an income tax benefit of $2.7 million, recognized under the transitional provisions of FASB Statement No. 142 and accounted for as a cumulative effect of a change in accounting principle. This adjustment relates to an impairment in carrying value as of January 1, 2002 of the Company’s investments in certain e-commerce subsidiaries. The remaining investment of these impaired subsidiaries was $31.7 million as of June 30, 2002. The 2001 amounts include a cumulative effect of a change in accounting principle for the adoption of FASB Statement No. 133.

On April 30, 2002, the Company finalized the exchange of its interest in Digital Signature Trust (“DST”) for an approximate 33% ownership in Identrus, LLC. No gain or loss was recognized in the financial statements. Included in the 2002 second quarter results are after-tax operating losses at DST of $1.5 million, or $0.02 per share and equity in after-tax losses of Identrus of $0.7 million or $0.01 per share. DST losses in the second quarter of 2001 were $3.4 million or $0.04 per share.

The annualized return on average assets was 1.26% in the second quarter of 2002, compared to 1.39% in the second quarter of 2001. The annualized return on average common shareholders’ equity was 14.21% in the second quarter of 2002, compared to 15.28% in the second quarter of 2001. The efficiency ratio, defined as the percentage of noninterest expenses to the sum of taxable equivalent net interest income and noninterest income, increased to 60.51% in the second quarter of 2002 from 59.00% in the second quarter of 2001.

For the first six months of 2002, the annualized return on average assets was 1.01%, compared to 1.36% for the first six months of 2001. The annualized return on average common shareholders’ equity was 11.37% for the first six months of 2002 compared to 15.37% for the first six months of 2001. The decreases reflect the impairment losses discussed above.

The Company’s second quarter decrease in earnings of $0.2 million, (0.21%), compared to the same period the previous year includes a $24.0 million (10.2%) increase in net interest income and a $9.9 million (10.6%) increase in noninterest income, offset by a $3.5 million (28.4%) increase in the provision for loan losses, a $25.7 million (13.0%) increase in noninterest expense, a $4.0 million (10.4%) increase in income taxes, and a $1.2 million (67.8%) decrease from the effects of minority interests.

For the first six months of 2002 compared to the same period in 2001, the $24.8 million (16.1%) decrease in net income reflects a $64.4 million (14.3%) increase in net interest income, offset by a $6.1 million (3.0%) decrease in noninterest income, a $8.8 million (35.1%) increase in the provision for loan losses, a $41.7 million (10.6%) increase in noninterest expense, a $4.9 million (6.2%) increase in income taxes, a

ZIONS BANCORPORATION AND SUBSIDIARIES

$2.7 million (78.6%) decrease from the effects of minority interests, and a $25.2 million (352.1%) increase in the cumulative effect of a change in accounting principle resulting from the adoption in 2002 of FASB Statement No. 142 and the impairment losses previously described, compared to the adoption in 2001 of FASB Statement No. 133.

Noninterest income for the first six months of 2001 included a $50.2 million gain from the sale of a nonpublic investee of the Company to a public company, Concord EFS, Inc., offset by valuation adjustments to venture capital investments of $23.1 million. Noninterest expense included $14.4 million in nonrecurring charges for certain benefit obligations, consulting services, and closed business operations. Also during the same period in 2001, the Company completed several acquisitions accounted for as purchases. Results of operations between periods are influenced because of these transactions.

OPERATING CASH EARNINGS RESULTS

The Company also provides its earnings performance on an operating cash basis because it believes its cash performance gives a better reflection of its financial position and shareholder value creation, and better demonstrates its ability to support growth, pay dividends, and repurchase stock, than providing only reported net income. Operating cash earnings are earnings before amortization of goodwill in the prior period, amortization of core deposit and other intangible assets, goodwill allocated to the value of branches sold in 2002, merger-related expenses and the cumulative effect of adoption of FASB Statements No. 133 and 142.

Operating cash earnings for the second quarter of 2002 were $84.8 million or $0.92 per diluted share, an increase of 0.2% and 1.1%, respectively, over the $84.6 million or $0.91 per diluted share earned in the second quarter of 2001. Operating cash earnings for the second quarter of 2002 increased 1.6% over the $83.5 million earned during the first quarter of 2002. Operating cash earnings per diluted share increased 2.2% from the $0.90 in the first quarter of 2002. Year-to-date operating cash earnings were $168.2 million, an increase of 1.0% over the $166.6 million earned in the first half of 2001. Year-to-date operating cash earnings per diluted share were $1.82, unchanged from the same period in 2001.

The operating cash annualized return on average assets for the second quarter and for the first six months of 2002 was 1.34% and 1.35%, compared to 1.48% and 1.51%, respectively, in 2001. Operating cash annualized return on average common shareholders’ equity was 22.99% and 23.34% for the second quarter and for the first six months of 2002, compared to 25.04% and 25.82% for the same periods in 2001. The Company’s cash efficiency ratio for the second quarter and for the first six months of 2002 was 59.27% and 58.66%, respectively, compared to 57.81% and 57.66% for the same periods in 2001.

NET INTEREST INCOME AND INTEREST RATE SPREADS

Net interest income for the second quarter of 2002, adjusted to a fully taxable-equivalent basis, increased 10.1% to $264.3 million compared to $240.2 million for the second quarter of 2001, and increased 1.1% from $261.3 million for the first quarter of 2002. Net interest margin was 4.61% for the second quarter of 2002, compared to 4.63% for the second quarter of 2001 and 4.70% for the first quarter of 2002. The decreased margin reflects primarily a reduced amount reclassified from other comprehensive income to interest income compared to the prior quarter. This reclassification results from certain interest rate swaps that were dedesignated as cash flow hedges in March and April of 2001. The pattern of reclassification was fixed at that time based on the then current yield curve. Six-month net interest income, on a fully taxable-equivalent basis, was $525.6 million in 2002, an increase of 14.0% compared to $460.9 million in 2001.

ZIONS BANCORPORATION AND SUBSIDIARIES

Net interest margin for the first six months of 2002 was 4.65% compared to 4.62% for the first six months of 2001.

The yield on average earning assets decreased 144 basis points during the second quarter of 2002 compared to the second quarter of 2001, and 14 basis points from the first quarter of 2002. The average rate paid this quarter on interest-bearing funds decreased 169 basis points from the second quarter of 2001 and 5 basis points from the first quarter of 2002. Comparing the first six months of 2002 with 2001, the yield on average earning assets decreased 167 basis points, while the cost of interest bearing funds decreased 201 basis points.

The spread on average interest-bearing funds for the second quarter of 2002 was 4.21%, up from 3.96% for the second quarter of 2001 and down from the 4.30% for the first quarter of 2002. The spread on average interest-bearing funds for the first six months of 2002 was 4.26%, up from 3.92% for the first six months of 2001.

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)

	Three Months Ended							Three Months Ended
(In thousands)	June 30, 2002							June 30, 2001

	Average Balance			Amount of		Average Rate		Average Balance			Amount of		Average Rate
	Average Balance			Interest (1)		Average Rate		Average Balance			Interest (1)		Average Rate

ASSETS
Money market investments	$	1,026,799		$	4,215	1.65	%	$	1,055,018		$	11,451	4.35	%
Securities:
Held to maturity		93,782			1,494	6.39	%		51,365			796	6.22	%
Available for sale		3,216,084			43,754	5.46	%		3,080,120			50,226	6.54	%
Trading account		591,475			5,479	3.72	%		566,835			7,197	5.09	%

Total securities		3,901,341			50,727	5.22	%		3,698,320			58,219	6.31	%


Loans:
Loans held for sale		175,662			2,191	5.00	%		206,384			3,158	6.14	%
Net loans and leases (2)		17,907,562			316,791	7.10	%		15,823,984			339,714	8.61	%

Total loans		18,083,224			318,982	7.08	%		16,030,368			342,872	8.58	%

Total interest-earning assets		23,011,364			373,924	6.52	%		20,783,706			412,542	7.96	%

Cash and due from banks		919,176							835,000
Allowance for loan losses		(266,669	)						(227,809	)
Goodwill		735,622							697,978
Core deposit and other intangibles		102,544							104,960
Other assets		1,626,849							1,523,514

Total assets	$	26,128,886						$	23,717,349


LIABILITIES
Interest-bearing deposits:
Savings and NOW deposits	$	2,528,034			6,963	1.10	%	$	2,131,000			8,759	1.65	%
Money market super NOW deposits		7,795,332			36,065	1.86	%		6,961,095			60,109	3.46	%
Time under $100,000		1,915,613			15,777	3.30	%		2,201,258			27,801	5.07	%
Time $100,000 and over		1,483,627			12,685	3.43	%		1,643,045			24,305	5.93	%
Foreign deposits		104,124			400	1.54	%		97,504			777	3.20	%

Total interest-bearing deposits		13,826,730			71,890	2.09	%		13,033,902			121,751	3.75	%

Borrowed funds:
Securities sold, not yet purchased		378,173			4,303	4.56	%		331,314			4,562	5.52	%
Federal funds purchased and security
repurchase agreements		2,654,564			10,873	1.64	%		2,561,867			25,214	3.95	%
Commercial paper		371,408			2,032	2.19	%		330,896			4,025	4.88	%
FHLB advances and other borrowings:
One year or less		796,092			3,757	1.89	%		303,306			4,208	5.56	%
Over one year		226,822			2,855	5.05	%		172,127			2,327	5.42	%
Long-term debt		783,314			13,932	7.13	%		550,985			10,304	7.50	%

Total borrowed funds		5,210,373			37,752	2.91	%		4,250,495			50,640	4.78	%

Total interest-bearing liabilities		19,037,103			109,642	2.31	%		17,284,397			172,391	4.00	%

Noninterest-bearing deposits		4,391,068							3,932,157
Other liabilities		362,332							313,608

Total liabilities		23,790,503							21,530,162
Minority interest		21,354							28,574
Total shareholders’ equity		2,317,029							2,158,613

Total liabilities and shareholders’ equity	$	26,128,886						$	23,717,349


Spread on average interest-bearing funds						4.21	%						3.96	%
Net interest income and net yield on
Interest-earning assets				$	264,282	4.61	%				$	240,151	4.63	%


(1) Taxable-equivalent rates used where applicable.
(2) Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)

	Six Months Ended							Six Months Ended
(In thousands)	June 30, 2002							June 30, 2001

	Average Balance			Amount of Interest (1)		Average Rate		Average Balance			Amount of Interest (1)		Average Rate
	Average Balance			Amount of Interest (1)		Average Rate		Average Balance			Amount of Interest (1)		Average Rate

ASSETS
Money market investments	$	979,032		$	7,901	1.63	%	$	927,083		$	21,665	4.71	%
Securities:
Held to maturity		86,503			2,292	5.34	%		51,670			1,781	6.95	%
Available for sale		3,282,589			88,139	5.41	%		3,187,063			108,531	6.87	%
Trading account		620,999			10,913	3.54	%		650,446			18,195	5.64	%

Total securities		3,990,091			101,344	5.12	%		3,889,179			128,507	6.66	%


Loans:
Loans held for sale		194,888			4,927	5.10	%		193,219			6,242	6.51	%
Net loans and leases (2)		17,617,696			629,839	7.21	%		15,124,673			667,913	8.91	%

Total loans		17,812,584			634,766	7.19	%		15,317,892			674,155	8.88	%

Total interest-earning assets		22,781,707			744,011	6.59	%		20,134,154			824,327	8.26	%

Cash and due from banks		947,890							811,801
Allowance for loan losses		(265,368	)						(214,680	)
Goodwill		735,409							633,192
Core deposit and other intangibles		104,860							87,000
Other assets		1,600,702							1,478,603

Total assets	$	25,905,200						$	22,930,070


LIABILITIES
Interest-bearing deposits:
Savings and NOW deposits	$	2,440,404			13,037	1.08	%	$	1,942,383			17,371	1.80	%
Money market super NOW deposits		7,573,164			68,446	1.82	%		6,775,483			128,552	3.83	%
Time under $100,000		1,969,633			34,261	3.51	%		1,996,123			51,545	5.21	%
Time $100,000 and over		1,537,628			27,203	3.57	%		1,546,005			46,022	6.00	%
Foreign deposits		102,699			788	1.55	%		110,062			1,846	3.38	%

Total interest-bearing deposits		13,623,528			143,735	2.13	%		12,370,056			245,336	4.00	%

Borrowed funds:
Securities sold, not yet purchased		385,183			8,005	4.19	%		357,527			9,847	5.55	%
Federal funds purchased and security
repurchase agreements		2,889,824			23,766	1.66	%		2,641,829			59,937	4.58	%
Commercial paper		364,317			3,918	2.17	%		308,813			8,342	5.45	%
FHLB advances and other borrowings:
One year or less		596,605			5,566	1.88	%		551,438			16,639	6.08	%
Over one year		227,163			5,687	5.05	%		151,497			4,236	5.64	%
Long-term debt		788,542			27,747	7.10	%		492,414			19,130	7.83	%

Total borrowed funds		5,251,634			74,689	2.87	%		4,503,518			118,131	5.29	%

Total interest-bearing liabilities		18,875,162			218,424	2.33	%		16,873,574			363,467	4.34	%

Noninterest-bearing deposits		4,324,426							3,678,833
Other liabilities		391,663							315,233

Total liabilities		23,591,251							20,867,640
Minority interest		19,958							41,073
Total shareholders’ equity		2,293,991							2,021,357

Total liabilities and shareholders’ equity	$	25,905,200						$	22,930,070

Spread on average interest-bearing funds						4.26	%						3.92	%
Net interest income and net yield on
interest-earning assets				$	525,587	4.65	%				$	460,860	4.62	%


(1) Taxable-equivalent rates used where applicable.
(2) Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

ZIONS BANCORPORATION AND SUBSIDIARIES

PROVISION FOR LOAN LOSSES

The provision for loan losses was $15.7 million for the second quarter of 2002, compared to $18.1 million for the first quarter of 2002, and $12.2 million for the second quarter of 2001. The provision for loan losses for the first six months of 2002 totaled $33.8 million, 35.1% more that the $25.0 million provision for the first six months of 2001. Annualized, the year-to-date provision is 0.38% of average loans for 2002 compared to 0.33% for the first six months of 2001. The increased provision for loan losses for the first six months of 2002 compared to the same period in 2001 reflects management’s evaluation of its various portfolios, statistical trends, and other various economic factors. It is management’s intent to maintain a strong coverage of nonperforming assets in a continued uncertain economic environment in the markets in which the Company operates.

NONINTEREST INCOME

Noninterest income for the second quarter of 2002 was $104.0 million, an increase of 10.6% from the $94.1 million for the second quarter of 2001, and an increase of 8.6% from the $95.8 million for the first quarter of 2002.

Comparing the segments of noninterest income for the second quarter of 2002 to the second quarter of 2001, service charges on deposit accounts increased 15.7%, loan sales and servicing income decreased 12.8%, other service charges, commissions and fees increased 15.4%, income from securities conduit increased 36.2%, underwriting, trading and nonhedge derivative income increased 23.3%, equity securities gains decreased 72.4%, fixed income securities gains decreased 93.9%, and other noninterest income increased 42.2%.

The increase in service charges on deposit accounts results mainly from increased fees associated with acquisitions consummated at the end of the first quarter of 2001 and later in 2001, as well as increased internal core deposit growth. Increased other service charges, commissions and fees also reflect the effect of the acquisitions. The increase in other noninterest income results in part from increased income from investments in bank-owned life insurance and from increases in the Company’s equity in earnings of unconsolidated investee companies, along with a gain of $.5 million from the sale of an investment advisory subsidiary.

Noninterest income for the six months ended June 30, 2002 was $199.8 million, a decrease of 3.0% from the $205.9 million for the same period in 2001.

Comparing the segments of noninterest income for the first six months of 2002 with the first six months of 2001, service charges on deposit accounts increased 21.8%, loan sales and servicing income decreased 37.1%, other service charges, commissions and fees increased 18.0%, income from securities conduit increased 114.0%, underwriting, trading and nonhedge derivative income increased 14.3%, equity securities gains decreased 96.0%, fixed income securities losses decreased 101.5%, and other noninterest income increased 46.9%.

The decrease in loan sales and servicing income results from the Company recording a writedown during the first quarter of 2002 of approximately $13.5 million on the capitalized residual cash flows related to an auto securitization nonhedge derivative transaction. The $13.5 million fair value of a swap entered into in this transaction was recorded as an asset, and nonhedge derivative income was increased by this amount. Without this transaction, underwriting, trading and nonhedge derivative income would have been approximately $10.4 million for the first six months of 2002 compared to $20.9 million for the first six

ZIONS BANCORPORATION AND SUBSIDIARIES

months of 2001. The adjusted decrease from the first six months of 2001 results mainly from the recognition of approximately $11.8 million of nonhedge derivative income during the first six months of 2001 resulting from increases in fair values of nonhedge derivatives in a rapidly decreasing interest rate environment, compared to $1.7 million recognized in 2002. The first six months of 2001 also included approximately $3.3 million of income from held to maturity securities transferred to trading in conjunction with the adoption of FASB Statement No. 133 and sold during the first quarter of 2001.

Income from securities conduit represents liquidity, interest rate agreement, and administrative fees from a sponsored qualified special purpose entity securities conduit established during 2001. The increased fees result from increases in the conduit’s securities portfolio activity.

As previously discussed, the decrease in equity securities gains from the first six months of 2001 results mainly from a gain of $50.2 million from the nonpublic investee transaction and losses of $23.1 million from writedowns of venture capital investments during the first six months of 2001. Fixed income securities losses for the first six months of 2001 included an impairment loss of approximately $4.9 million on SBA interest-only securities.

Changes in other noninterest income between the comparable six-month periods include a $1.4 million increase in income from bank-owned life insurance and a $1.8 million increase in the Company’s equity in earnings of unconsolidated investee companies. Other income for the first six months of 2002 also includes a pretax gain of approximately $3.2 million from the sales of three California branches. The after-tax gain from the sales was approximately $1.4 million.

NONINTEREST EXPENSE

Noninterest expense for the second quarter of 2002 was $222.9 million, an increase of $16.8 million, or 8.1% over $206.1 million for the second quarter of 2001. Excluding the amortization of goodwill in the second quarter of 2001, noninterest expense increased $25.7 million, or 13.0%. Comparing significant changes in noninterest expense segments for the second quarter of 2002 with the second quarter of 2001, salaries and employee benefits increased 15.6%, occupancy increased 11.8%, furniture and equipment increased 9.6%, legal and professional fees increased 17.7%, merger-related expense and amortization of goodwill decreased 100.0% to zero amounts, amortization of core deposit and other intangibles increased 40.6%, and the total of all other noninterest expenses increased 8.1%.

Expenses for the second quarter of 2001 do not include expenses associated with the operations of the companies acquired to form Lexign, Inc., and Minnequa Bancorp, all of which were acquired subsequent to June 30, 2001. The increase in salaries and wages for the second quarter of 2002 compared to the second quarter of 2001 includes increased pension and employee medical benefits expense of $3.7 million and nonrecurring salary expense associated with the DST transaction of $1.0 million. Legal and professional fees for the second quarter of 2002 include $.6 million of legal expense related to the DST transaction and $1.2 million of consulting fees related to a procurement initiatives project. The increase in amortization of core deposit and other intangibles reflects increased amortization related to the previously discussed purchase acquisitions.

Noninterest expense for the six months ended June 30, 2002 was $435.3 million compared to $409.6 million for the six months ended June 30, 2001, an increase of 6.3%. Excluding the amortization of goodwill in the six months ended June 30, 2001, noninterest expense increased 10.6%. Comparing significant changes in noninterest expense segments for the first six months of 2002 with the same period for 2001, salaries and

ZIONS BANCORPORATION AND SUBSIDIARIES

employee benefits increased 12.6%, occupancy increased 13.6%, furniture and equipment increased 12.2%, merger-related expense and amortization of goodwill decreased 100.0% to zero amounts, amortization of core deposit and other intangibles increased 57.2%, and the total of all other noninterest expenses increased 6.3%.

Expenses for the six months ended June 30, 2001 do not include expenses associated with the operations of the companies acquired to form Lexign, Inc., and Minnequa Bancorp, all of which were acquired subsequent to June 30, 2001 and only include expenses of Eldorado Bancshares and branches acquired in Arizona from Pacific Century Bank for the second quarter of 2001. The increase in amortization of core deposit and other intangibles reflects increased amortization related to these purchase acquisitions.

At June 30, 2002, the Company had 8,221 full-time equivalent employees, 409 domestic offices, and 587 ATMs, compared to 7,738 full-time equivalent employees, 413 offices, and 537 ATMs at June 30, 2001.

INCOME TAXES

The Company’s income taxes increased 10.4% to $43.0 million for the second quarter of 2002 compared to $39.0 million for the second quarter of 2001. The Company’s income taxes were $85.0 million for the first six months of 2002, compared to $80.1 million for the same period in 2001. The Company’s effective income tax rate was 34.5% for the second quarter of 2002, compared to 35.2% for the second quarter of 2001. The effective income tax rate for the first six months of 2002 was 34.6% compared to 36.0% for the first six months of 2001. The lower effective rate is mainly due to higher book income resulting from the nonamortization of goodwill in 2002.

ANALYSIS OF FINANCIAL CONDITION

EARNING ASSETS

Average earning assets increased 13.1% to $22,782 million for the six months ended June 30, 2002, compared to $20,134 million for the six months ended June 30, 2001. Earning assets comprised 87.9% of total average assets for the first six months of 2002, compared with 87.8% for the first six months of 2001.

Average money market investments, consisting of interest-bearing deposits, federal funds sold and security resell agreements increased 5.6% to $979 million in the first six months of 2002 as compared to $927 million in the first six months of 2001.

Average securities increased 2.6% to $3,990 million for the first six months of 2002 compared to $3,889 million for the first six months of 2001. Average investment portfolio securities increased 4.0% and average trading securities decreased 4.5%.

Average net loans and leases increased 16.3% to $17,813 million for the first six months of 2002 compared to $15,318 million for the first six months of 2001, representing 78.2% of earning assets in the first six months of 2002 compared to 76.1% in the first six months of 2001. Average net loans and leases were 99.2% of average total deposits for the six months ended June 30, 2002, as compared to 95.4% for the first six months of 2001.

ZIONS BANCORPORATION AND SUBSIDIARIES

INVESTMENT SECURITIES

The following table presents the Company’s held-to-maturity and available-for-sale investment securities:

	June 30,				December 31,				June 30,
(In millions)	2002				2001				2001

	Amortized		Market		Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value		Cost		Value

HELD TO MATURITY
Mortgage-backed and other debt securities	$	108	$	109	$	79	$	80	$	51	$	51

		108		109		79		80		51		51


AVAILABLE FOR SALE
U.S. Treasury securities		51		54		61		63		57		59
U.S. government agencies and corporations:
Small Business Administration loan-backed securities		768		770		674		674		619		618
Other agency securities		656		661		769		781		399		404
States and political subdivisions		546		559		505		514		425		430
Mortgage/asset-backed and other debt securities		826		842		960		969		1,117		1,131

		2,847		2,886		2,969		3,001		2,617		2,642

Equity securities:
Mutual funds:
Accessor Funds, Inc.		272		278		266		267		235		245
Stock		15		30		10		16		63		106

		287		308		276		283		298		351

		3,134		3,194		3,245		3,284		2,915		2,993

Total	$	3,242	$	3,303	$	3,324	$	3,364	$	2,966	$	3,044

LOANS

The Company has structured its organization to separate the lending function from the credit review function to strengthen the control and independent evaluation of credit activities. Loan policies and procedures provide the Company with a framework for consistent underwriting and a basis for sound credit decisions. In addition, the Company has well-defined standards for grading its loan portfolio, and management utilizes the comprehensive loan grading system to determine risk potential in the portfolio. Another aspect of the Company’s credit risk management strategy is the diversification of the loan portfolio. The Company has a diversified loan portfolio with some emphasis in real estate (as set forth in the following table), but has no significant exposure to highly leveraged transactions.

ZIONS BANCORPORATION AND SUBSIDIARIES

The table below sets forth the amount of loans outstanding by type:

(In millions)	June 30,		December 31,		June 30,
	2002		2001		2001

Types
Loans held for sale	$	165	$	298	$	207
Commercial, financial, and agricultural		4,168		4,109		4,043

Real estate:
Construction		3,046		2,936		2,699
Other:
Home equity credit line		582		401		330
1-4 family residential		3,379		3,168		3,075
Other real estate-secured		5,846		5,126		4,997

		9,807		8,695		8,402

		12,853		11,631		11,101

Consumer:
Bankcard		121		126		111
Other		743		707		646

		864		833		757

Lease financing		409		421		372
Foreign loans		25		14		17
Other receivables		68		107		70

Total loans	$	18,552	$	17,413	$	16,567

Loans held for sale on June 30, 2002 decreased 44.5% from December 31, 2001. All other loans, net of unearned income and fees increased 7.5% to $18,287 million on June 30, 2002 compared to $17,013 million on December 31, 2001. Commercial loans, construction loans, and other real estate loans increased from year-end 1.4%, 3.7%, and 12.8%, respectively. Consumer loans increased 3.7% while lease financing decreased 2.9%. Foreign loans increased 78.6% to $25 million and other receivables decreased 36.4%. Within the other real estate loan portfolio, home equity credit line loans increased 45.1%, 1-4 family residential loans increased 6.7%, and all other real estate-secured loans increased 14.0% from year-end. Loans are classified in accordance with regulatory guidelines primarily based on collateral. Therefore, other real estate-secured loans include loans which would be classified as commercial if categorized according to loan purpose.

On June 30, 2002, long-term conforming first mortgage real estate loans serviced for others totaled $427 million, and consumer and other loan securitizations, which include loans sold under revolving securitization structures, totaled $2,544 million. During the first six months of 2002, the Company sold $258 million of loans classified in held for sale, and securitized and sold SBA loans, home equity credit line loans, credit card receivables and automobile loans totaling $464 million. During the first six months of 2002, total loans sold were $722 million compared to total loans sold of $712 million during the first six months of 2001.

As of June 30, 2002, the following table shows that the Company had assets of $232 million recorded on its balance sheet related to the $2,544 million of loans sold to securitized trusts. The Company does not control or have any equity interest in the trusts. However, as is common with securitized transactions, the Company has retained subordinated interests of $138 million representing the Company's junior position to other

ZIONS BANCORPORATION AND SUBSIDIARIES

investors in the securities. The capitalized residual cash flows (sometimes called “excess servicing”) of $94 million principally represent the present value of estimated excess cash flows over the life of the sold loans. These excess cash flows are subject to prepayment and credit risk.


	Sold loans being serviced				Residual interests
					on balance sheet at June 30, 2002
	Sales
	for six		Outstanding		Subordinated		Capitalized
	months ended		balance at		retained		residual
(In millions)	June 30, 2002		June 30, 2002		interest		cash flows		Total


Auto loans	$	181	$	396	$	24	$	7	$	31
Home equity credit lines		119		346		9		11		20
Bankcard receivables		118		71		3		1		4
Nonconforming residential real estate loans		-		130		3		4		7
SBA 504 loans		-		998		99		65		164
SBA 7(a) loans		1		215		-		2		2
Farmer Mac		45		388		-		4		4

Total	$	464	$	2,544	$	138	$	94	$	232

RISK ELEMENTS

The Company’s nonperforming assets, which include nonaccruing loans, restructured loans, other real estate owned and other nonperforming assets, were $116 million on June 30, 2002, down from $120 million on December 31, 2001, and up from $88 million on June 30, 2001. Such nonperforming assets as a percentage of net loans and leases, other real estate owned and other nonperforming assets were 0.63% on June 30, 2002, compared to 0.69% on December 31, 2001 and 0.53% on June 30, 2001.

Accruing loans past due 90 days or more totaled $32 million on June 30, 2002, down from $46 million on December 31, 2001 and $41 million on June 30, 2001. These loans equaled 0.18% of net loans and leases on June 30, 2002, 0.27% on December 31, 2001, and 0.25% on June 30, 2001.

No loans to borrowers were considered potential problem loans at June 30, 2002 and December 31, 2001. The Company had one loan totaling $14.0 million on June 30, 2001 that was considered a potential problem loan. Potential problem loans are defined as loans presently on accrual, not contractually past due 90 days or more, and not restructured, but about which management has serious doubt as to the future ability of the borrower to comply with present repayment terms and which may result in the reporting of the loans as nonperforming assets.

The Company’s total recorded investment in impaired loans included in nonaccrual loans and leases amounted to $59 million on June 30, 2002, as compared to $80 million on December 31, 2001, and $63 million on June 30, 2001. The Company considers a loan to be impaired when the accrual of interest has been discontinued and it meets other applicable criteria under current accounting standards. The amount of the impairment is measured based on the present value of expected cash flows, the observable market price of the loan, or the fair value of the collateral. Impairment losses are included in the allowance for loan losses through a provision for loan losses. Included in the allowance for loan losses on June 30, 2002, December 31, 2001, and June 30, 2001, is a required allowance of $9 million, $18 million and $13 million, respectively, on $25 million, $20 million and $17 million, respectively, of the recorded investment in impaired loans.

ZIONS BANCORPORATION AND SUBSIDIARIES

The following table sets forth the nonperforming assets:

	June 30,			December 31,			June 30,
(In millions)	2002			2001			2001

Nonaccrual loans	$	101		$	109		$	75
Restructured loans		1			1			2
Other real estate owned and other
nonperforming assets		14			10			11

Total	$	116		$	120		$	88

% of net loans and leases*, other real estate
owned and other nonperforming assets		0.63	%		0.69	%		0.53	%
Accruing loans past due 90 days or more	$	32		$	46		$	41

% of net loans and leases*		0.18	%		0.27	%		0.25	%
*Includes loans held for sale.

ALLOWANCE FOR LOAN LOSSES

The Company's allowance for loan losses was 1.43% of net loans and leases on June 30, 2002, compared to 1.50% on December 31, 2001 and 1.40% on June 30, 2001. Net charge-offs during the second quarter of 2002 were $15.4 million, or annualized 0.34% of average net loans and leases, compared to net charge-offs of $14.5 million (annualized 0.33%) for the first quarter of 2002, and $8.6 million (annualized 0.21%) for the second quarter of 2001. Net charge-offs for the first six months of 2002 were $29.8 million, or annualized, 0.34% of average net loans and leases, compared to $14.7 million (annualized 0.19%) for the first six months of 2001.

The allowance, as a percentage of nonaccrual loans and restructured loans, was 260.0% on June 30, 2002, compared to 236.7% on December 31, 2001 and 300.2% on June 30, 2001. The allowance, as a percentage of nonaccrual loans and accruing loans past due 90 days or more was 199.3% on June 30, 2002, compared to 168.2% on December 31, 2001 and 199.2% on June 30, 2001.

At June 30, 2002, the allowance for loan losses includes an allocation of $10 million related to commitments to extend credit for which the Company could separate the credit risk from that of any related loans on the balance sheet and for standby letters of credit. Commitments to extend credit on loans and standby letters of credit on June 30, 2002, December 31, 2001, and June 30, 2001 totaled $7,502 million, $6,812 million, and $7,506 million, respectively.

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

ZIONS BANCORPORATION AND SUBSIDIARIES

The following table shows the changes in the allowance for loan losses and a summary of loan loss experience:

	Six Months			Twelve Months			Six Months
	Ended			Ended			Ended
(In millions)	June 30,			December 31,			June 30,
	2002			2001			2001


Average loans* and leases outstanding (net of unearned income)	$	17,813		$	16,015		$	15,318


Allowance for possible losses:
Balance at beginning of year	$	260		$	196		$	196
Allowance of companies acquired		–			30			24
Provision charged against earnings		34			73			25
Loans and leases charged–off:
Commercial, financial and agricultural		(23	)		(30	)		(10	)
Real estate		(3	)		(5	)		(3	)
Consumer		(8	)		(13	)		(6	)
Lease financing		(3	)		(7	)		(2	)

Total		(37	)		(55	)		(21	)

Recoveries:
Commercial, financial and agricultural		4			10			4
Real estate		–			2			–
Consumer		2			3			2
Lease financing		1			1			–

Total		7			16			6

Net loan and lease charge-offs		(30	)		(39	)		(15	)

Balance at end of period	$	264		$	260		$	230


*Includes loans held for sale

Ratio of annualized net charge-offs to average loans and leases		0.34	%		0.24	%		0.19	%

DEPOSITS

Total deposits increased 5.3% to $18,788 million on June 30, 2002 as compared to $17,842 million on December 31, 2001. The Company’s core deposits, consisting of demand, savings and money market deposits and time deposits under $100,000 increased 7.2% from December 31, 2001. Comparing June 30, 2002 to December 31, 2001, demand deposits increased 4.2%, savings and money market deposits increased 12.1%, time deposits under $100,000 decreased 9.2%, time deposits $100,000 and over decreased 9.6%, and foreign deposits decreased 30.5%.

Average total deposits of $17,948 million for the first six months of 2002 increased 11.8% compared to $16,049 million for the first six months of 2001, with average demand deposits increasing 17.5%. Average savings and NOW deposits increased 25.6% and average money market and super NOW deposits increased 11.8% during the first six months of 2002 compared with the same period one year earlier.

Average time deposits under $100,000 decreased 1.3% and time deposits $100,000 and over decreased 0.5% for the first six months of 2002 compared to the first six months of 2001. Average foreign deposits decreased 6.7% for the same periods.

ZIONS BANCORPORATION AND SUBSIDIARIES

LIQUIDITY AND INTEREST RATE SENSITIVITY

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

The Federal Home Loan Bank (“FHLB”) system is a major source of liquidity for each of the Company’s subsidiary banks. Zions First National Bank and The Commerce Bank of Washington are members of the FHLB of Seattle. California Bank & Trust, Nevada State Bank, and National Bank of Arizona are members of the FHLB of San Francisco. Vectra Bank Colorado is a member of the FHLB of Topeka. The FHLB allows member banks to borrow against their eligible loans to satisfy liquidity requirements.

As another source of liquidity, the Company’s core deposits, consisting of demand, savings and money market deposits and time deposits under $100,000, constituted 91.5% of total deposits on June 30, 2002, as compared to 89.9% on December 31, 2001 and 89.7% on June 30, 2001.

Maturing balances in loan portfolios provide flexibility in managing cash flows. Maturity management of those funds is an important source of medium to long-term liquidity. The Company’s ability to raise funds in the capital markets through the securitization process and by debt issuance allows the Company to take advantage of market opportunities to meet funding needs at a reasonable cost.

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

At June 30, 2002, $223.5 million of dividend capacity was available from subsidiaries to pay to the parent without having to obtain regulatory approval. Dividends received by the parent from subsidiaries were $88.8 million for the second quarter of 2002 and $120.8 million for the six months ended June 30, 2002. The parent also has a program to issue short-term commercial paper. At June 30, 2002 outstanding commercial paper was $339.0 million. At June 30, 2002, the parent had a revolving credit facility with a bank totaling $40 million and a margin borrowing facility totaling $14 million. The parent had $7 million outstanding on the revolving credit facility at June 30, 2002.

Zions First National Bank (“ZFNB”) provides a $5.1 billion liquidity facility for a fee to a qualified special purpose entity securities conduit (“conduit”). ZFNB also provides for a fee administrative and investment advisory services and hedge support to the conduit. The conduit purchases U.S. Government-backed and AAA rated securities. These assets are funded through the issuance of commercial paper. With certain limitations, ZFNB is required to advance funds to the conduit to repay maturing commercial paper upon the conduit’s inability to access the commercial paper market or upon a commercial paper market disruption. No amounts were outstanding under this liquidity facility at June 30, 2002.

On January 18, 2002, the Company’s board of directors authorized a repurchase of up to $55 million of the Company’s common stock. An additional repurchase of up to $50 million was authorized on July 18, 2002. On July 30, 2001, the Company’s board of directors authorized a repurchase of up to $50 million of the Company’s common stock. During the second quarter of 2002, the Company repurchased approximately 561

ZIONS BANCORPORATION AND SUBSIDIARIES

thousand common shares at a cost of $31.2 million. The Company repurchased approximately 481 thousand shares during the first quarter of 2002 at a cost of $25.3 million. For the year 2001, the Company repurchased approximately 883 thousand common shares at a cost of $46.5 million.

Interest rate sensitivity measures the Company’s financial exposure to changes in interest rates. Interest rate sensitivity is, like liquidity, affected by maturities of assets and liabilities. The Company assesses its interest rate sensitivity using duration and simulation analysis. Duration is a measure of the weighted-average expected lives of the discounted cash flows from assets and liabilities. Simulation is used to estimate net interest income over time using alternative interest rate scenarios.

The Company, through the management of maturities and repricing of its assets and liabilities and the use of certain derivative instruments, including interest rate caps, floors, futures, options and exchange agreements, attempts to manage the effect on net interest income of changes in interest rates. The prime lending and the LIBOR (London Interbank Offer Rate) curve, are the primary indices used for pricing the Company’s loans, and the 91-day Treasury bill rate is the index used for pricing many of the Company’s deposits. The Company does not hedge the prime/LIBOR/T-bill spread risk through the use of derivative instruments.

CAPITAL RESOURCES AND DIVIDENDS

Total shareholders’ equity on June 30, 2002 was $2,337 million, an increase of 2.5% over the $2,281 million on December 31, 2001, and an increase of 6.4% over the $2,198 million on June 30, 2001. The Company’s tangible common equity ratio, tangible equity to tangible assets, was 6.03% at June 30, 2002 compared to 5.98% at December 31, 2001 and 6.05% at June 30, 2001. The ratio of average equity to average assets for the first six months of 2002 was 8.86% as compared to 8.82% for the same period in 2001. On June 30, 2002, the Company’s total risk-based capital ratio was 11.86%, as compared to 12.20% on December 31, 2001 and 11.63% on June 30, 2001. On June 30, 2002, the Company’s Tier I risk-based capital ratio was 8.05%, as compared to 8.25% on December 31, 2001 and 8.35% on June 30, 2001. The Company’s leverage ratio on June 30, 2002 was 6.48% compared to 6.56% on December 31, 2001 and 6.69% on June 30, 2001. The decrease in the capital ratios as of June 30, 2002 resulted mainly from the repurchase of common stock previously discussed and the loan growth experienced by the Company.

Dividends declared of $.20 per common share for the second quarter of 2002 were unchanged from the dividends declared for the first quarter of 2002 and each quarter during 2001. The common cash dividend payout of net income for the second quarter of 2002 was 22.4% compared to 38.9% for the first quarter of 2002 which was adjusted to reflect the effect of the goodwill impairment loss, and 25.2% for the second quarter of 2001.

CRITICAL ACCOUNTING POLICIES

The Company has reviewed and made no significant changes in critical accounting policies and assumptions compared to the disclosures made in Zions Bancorporation’s Annual Report on Form 10-K for the year ended December 31, 2001.

ZIONS BANCORPORATION AND SUBSIDIARIES

FORWARD-LOOKING INFORMATION

Statements in Management’s Discussion and Analysis that are not based on historical data are forward- looking, including, for example, the projected performance of the Company and its operations. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the projections discussed in Management’s Discussion and Analysis since such projections involve significant risks and uncertainties. Factors that might cause such differences include, but are not limited to: the timing of closing proposed acquisitions being delayed or such acquisitions being prohibited; competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally in areas in which the Company conducts its operations, being less favorable than expected; and legislation or regulatory changes which adversely affect the Company’s operations or business. The Company disclaims any obligation to update any factors or to publicly announce the results of revisions to any of the forward-looking statements included herein to reflect future events or developments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk is the most significant market risk regularly undertaken by the Company. The Company believes there have been no significant changes in market risk compared to the disclosures in Zions Bancorporation’s Annual Report on Form 10-K for the year ended December 31, 2001.

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

)

The annual meeting of shareholders was held on April 26, 2002. The total number of shares eligible for voting was 91,987,261.

)

Election of Directors

Proxies were solicited by Zions Bancorporation's management pursuant to Regulation 14A under the Securities Exchange act of 1934. There was no solicitation in opposition to management's nominees as listed in the proxy statement, and all of such nominees were elected pursuant to the vote of the shareholders as indicated in the proxy statement.

)

The matters voted upon and the results were as follows:

(1)

Election of Directors

	For	Withhold Authority

Jerry C. Atkin	77,708,982	665,036
Stephen D. Quinn	77,707,704	666,314
Shelley Thomas Williams	77,697,830	678,388

ZIONS BANCORPORATION AND SUBSIDIARIES

ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K

	a)	Exhibits

		The following exhibit is included herein:

		(10.18) Amended and Restated Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan

	b)	Reports on Form 8-K

		Zions Bancorporation filed the following report on Form 8-K during the quarter ended June 30, 2002:

		Form 8-K filed April 23, 2002 (Item 7) Exhibit 99.1 Zions Bancorporation and Subsidiaries Consolidated Statements of Income – 5 quarter

ZIONS BANCORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ZIONS BANCORPORATION

	/s/ Harris H. Simmons

	Harris H. Simmons, Chairman, President and Chief Executive Officer


	/s/ Doyle L. Arnold

	Doyle L. Arnold, Executive Vice President and Chief Financial Officer
Dated August 13, 2002

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