As far as holiday surprises go, Zions Bancorp. chief executive Harris H. Simmons has had at least one too many for his liking this year.

After Zions and hometown rival First Security Corp. finally cleared Justice Department regulatory scrutiny for their planned merger, Mr. Simmons set to preparing for the meeting - scheduled to take place today - where shareholders of the companies were expected to give final approval to the deal.

Then late last week came an order from the Securities and Exchange Commission requiring Zions to restate its financial results for the past three years - effectively killing any chance to consummate the marriage of the pair of Salt Lake City companies this year.

"This was not what I was expecting for the holidays," the characteristically understated Mr. Simmons said in an interview Monday.

Indeed, since the merger was announced on June 6, the managements of First Security Corp. and Zions Bancorp have traveled a remarkably bumpy road to the altar.

Long delays in winning approval from the Justice Department culminated in an agreement to divest more branches and deposits than the companies originally expected. The deal also faced vocal opposition from Utah business owners and outcries from community bankers.

Zions and First Security "have been thrown more curveballs than most," said Joseph K. Morford, an analyst with Ragen MacKenzie Inc. in San Francisco. "This has been a true test of patience for management, but the merits of the deal are still there."

Until the SEC stepped in, it had appeared as though the two would be able to sew up the deal by yearend. The latest delay has produced exasperation at Zions.

"We were so close to the deadline, and then another regulator blew us up," said Zions' chief financial officer, Dale Gibbons in an interview Monday. "There has been a fair degree of frustration in bringing this to consummation; we would really, really like to focus on closing this deal."

Big in-market mergers, such as the deal that created FleetBoston Financial Corp., have tended to elicit more competition concerns and scrutiny among consumer activists and regulators. But perhaps by no fault of their own, Zions and First Security, two banks considered to have savvy management with a talent for smoothly conducting acquisitions, seem to have been particularly susceptible to misfortunes.

"You always expect a certain amount of friction and frustration in any type of in-market merger, but it seems these guys are definitely getting more than their fair share," said Michael L. Mayo, managing director of bank research at Credit Suisse First Boston.

Even with all the headaches, the banks' managers and outside observers doubt that the deal to create the second-largest banking company headquartered in the West (the new First Security would have $40 billion of assets, behind $207 billion-asset Wells Fargo & Co.) is imperiled.

Both Mr. Simmons and Mr. Gibbons, who would retain their titles at the merged company, described the chain of delays as "nuisances" and said the shareholder meeting and subsequent close of the deal will now occur early in the first quarter.

"Nothing that we've seen so far has created any really substantive hurdles," Mr. Simmons said. "Are they distractions? Yeah, but not to the point that I'm feeling any different about the transaction or the value of the company we are going to create."

The most significant effect the delay will have, Mr. Gibbons said, is that the new company will have to wait to enjoy the planned $108 million of cost savings. Management had planned to convert the merged bank's Nevada operations to a common computer platform on the weekend of Jan. 15. That move must now be delayed six weeks, he said.

Rather than realizing efficiencies from the merger early in January, "for the most part we'll get a bunching up of cost savings more towards the end of the first quarter," Mr. Gibbons said.

However, converting the Utah and Idaho operations - the merging companies' biggest markets - is expected to take place as planned in mid-April, he said.

Another hassle that cropped up because of the delay is that both companies must still report fourth-quarter earnings separately, rather than as one combined institution, Mr. Simmons said.

"We had hoped to get there and have the closing behind us to start the new year," the CEO said.

The prospective deal has been taking flak from the grassroots level as well. A group of seven small to midsize businesses is suing the banking companies in federal court to stop the merger.

"My clients' concern is that if this becomes a single large bank which will dominate Utah, then what is already a not-very-good competitive situation will become considerably worse," said George M. Allen, a Provo, Utah-based lawyer representing the coalition. "They'll have a monopoly."

Mr. Gibbons dismissed the group's concerns with the merger, arguing that the Justice Department's divestiture plan will ensure fair competition. However, he acknowledged that the group was able to make a stir.

"They are a very small group, but they are also very vocal," Mr. Gibbons said.

The merger also has angered local community banks that have been grumbling that they were unfairly cut out of buying branches that Zions and First Security are required by the Justice Department to divest. Because the 68 branches must be sold in large parcels, the small banks contend they are at a disadvantage to large, out-of-state competitors.

"They're selling theses branches off in packages so big that no community bank in Utah could purchase unless they raised substantial additional capital," Ron Heaton, president and CEO of $210 million-asset State Bank of Southern Utah, said last week.

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