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Moody’s downgrades 11 regional banks including Zions and BoH



Pago Pago, AMERICAN SAMOA — U.S. financial media, including the Wall Street Journal (WSJ) are reporting that Moody’s Investor Services has downgraded 11 regional banks including Utah-based Zions Bank, the Territorial Bank of American Samoa’s corresponding bank, and Bank of Hawaii.

This comes along with a downgrade of the U.S. banking system to "Strong+" from "Very Strong-". 

Zions Bancorporation has disputed Moody’s assessment that the bank has “significant” unrealized losses on its securities portfolio and its capital has deteriorated, as stated in a report released Friday, April 21.

James Abbott, the bank’s director of investor relations, said Moody’s focus on unrealized losses misses the “tremendous value” of Zions’ granular, low-cost deposit base.

“We estimate that value creates more than $5 billion as a counterbalance to the unrealized losses to the securities portfolio,” Abbott said, according to Wall Street journal reporting.

Earlier this month, Al Landon, assistant dean at the University of Utah’s David Eccles School of Business, told the Deseret News that while he believes the U.S. banking sector is not on the verge of collapse, he does understand the nervousness the recent failures have incited in consumers.

After last months failure of Silicon Valley Bank and Signature Banks.— a diverse group of prominent Utah leaders representing several sectors (government, regulatory, investment, business) discussed the fallout in relation to Zions Bank.

Scott Anderson, CEO of Zions Bank shared a statement about the status of the Zions at the time.

"Zions differs from these banks in a number of very different ways. We've certainly grown over the past decade but nothing close to the aggressive growth rate at which Silicon Valley Bank and Signature Bank have grown. We have a business that is geographically diversified and is also diversified in terms of the types of clients we bank and the products we offer.

“Our strategy has been to focus on a large number of small and medium market businesses in a wide diversity of industries, as opposed to the narrow strategies followed by Silicon Valley Bank and Signature Bank. And our deposit base is very granular, consisting of some 1.4 million accounts, most of which are fully insured (by number), and nearly half of which (by account balances) are fully insured by the FDIC. We simply don't seek to build a bank with mammoth wholesale deposit accounts. To put a fine point on it, Silicon Valley Banks average Deposit Account Balance was an astonishing 22 times the size of the average deposit balance at Zions, with only 5% of their accounts fully insured." 

The downgrade of the 11 Regional Banks was “due to increased instability due to low capitalization, unrealized losses on securities, reliance on uninsured deposit funding, higher interest rates, and recent bank failures.”

Also among the 11 downgraded was Bank of Hawaii.


Zions is the bank the American Samoa government uses to deposit all of its federal grant funds, as it’s required by the US federal government that these types of funds be deposited into a FDIC insured bank. The Territorial Bank of American Samoa does not have FDIC insurance.