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TWST: What expectations have the events of 2000 within the commercial banking area generated for you as an analyst, and for the investor community, for 2001?

Ms. Reeves: 2000 set the stage for credit quality to come back to the surface. Once again, the importance of the current interest rate picture and the general economic environment is at the forefront of assessing the health and general tenor of the commercial banking industry. In 2000, investors and the market rewarded those companies that were able to demonstrate consistency of earnings, credibility of management, impeccable credit quality, and capital strength. The reward was in the form of impressive multiple expansions. One change that took place in 2000 was the embracing of full disclosure (FD) and the need for analysts to recommend companies with little company guidance. This new disclosure rule is adding to the market volatility and could be further migrating analysts to the more conservative companies. FD has led to more scrutiny of companies by investors on issues such as credit, revenue growth and nonrecurring charges. We would expect further multiple expansion of those companies with solid earnings growth consistency. There is also an “investor’s divide” phenomenon in that the “haves” and the “have-nots” of the investment community continue to separate as these multiples continue to expand for the “haves.” There is greater earnings growth and revenue growth for those companies, and investors as well as analysts want to participate in that upside. But the market also understands that there is greater risk because they are getting that exceptional revenue growth and earnings growth.

TWST: Zions (Nasdaq:ZION) has a buy rating. What underlies your assessment on Zions?

Ms. Reeves: Zions operates in great markets. It has historically been a very strong performer and its valuation exceeded its peer group’s. The company has a consistency of earnings growth, which tended to be higher than its peer group’s. We’re looking at probably 15% to 17% EPS growth for Zions. Zions stubbed its toe with First Security, a deal that did not occur. That deal would have made sense if it had taken place in a more timely manner, but it didn’t, and Wells Fargo (NYSE:WFC) now owns the First Security franchise. Zions received a premium multiple because of its management — one of the best-run franchises in the country. It aggressively manages the balance sheet and aggressively manages capital. It knows every detail of its return on capital throughout the franchise. It’s one of the biggest SBA lenders across the country and that business has worked very well for them. It’s gone head-to-head with Wells Fargo for quite some time in every other market except for Utah. So with Wells Fargo getting First Security, it’s not like this will be the first time Zions is going to be competing against Wells Fargo. In fact, it could be argued that in Utah, Zions might have a leg up on Wells Fargo because Zions is the hometown franchise, and some clients might prefer to be with the local company.