analyst Joseph K. Morford 3d lowered his rating on the stock to "neutral" from "buy." Mr. Morford downgraded the bank because the stock has more than doubled this year, and he reasoned that it is due to level off. Zions, whose low for the year was $34, lost $1 Tuesday to $72.75. Zions' third-quarter 1.5% return on assets and 22% return on equity place it among the most profitable banks in the industry, he said. Mr. Morford said the Salt Lake City-based company is now trading at about 11.7 times his 1996 estimate of $6.30. Compared with an 11.0 multiple for the average western bank, the company has "a well-deserved premium valuation," said Mr. Morford. Anthony A. Lombardi, a bank analyst at Dean Witter Reynolds, said a number of analysts have become less aggressive about recommending Zions because of its price, and have lowered their ratings to encourage investors to lock in profits. Both analysts said the outlook remains positive on a bank that has consistently demonstrated an ability to generate returns on equity in excess of 18%. Several analysts were positive about another stock Tuesday, the Student Loan Marketing Association. Thomas O'Donnell at Smith Barney raised his rating on Sallie Mae to "buy" from "outperform," Michael R. Hughes at Merrill Lynch upgraded the stock to "above average" from "neutral," and David Hochstim at Bear Stearns upped the association to "buy" from "attractive." Sallie Mae stock rose $2.75 to $66.25 in Tuesday trading. Analysts said the most recent positive event to buoy the stock was a federal court ruling on Monday that the Department of Education could not charge the company a 30-basis-point offset fee on securitized loans. "The key thing is that the company's fate is in its own hands," said Mr. O'Donnell. "It's no longer dependent on the government. Even if direct lending is cut back, the operations and fundamentals remain strong." Others said that despite concerns about upgrading the company at a possible pinnacle after the stock has made impressive gains, the positive momentum on the stock is too strong to overlook. "It is all the good things that have been happening already that a lot of people in the analyst community have missed, including me," said Mr. Hughes of Merrill Lynch. Mr. Hughes expects continued improvement in Sallie Mae's servicing in 1996, a high volume of securitization that will free capital for additional stock buybacks and further overhead cuts. "It's arguably a financial services company without interest rate or credit risk," said Mr. Hochstim. "It's unique in that respect." Separately, Mr. Lombardi said that First Commerce Corp. gave investors good news Monday, raising dividends 17%, to 35 cents per common share. The bank is well capitalized, he said, and when it converts preferred to common stock next year, it can use the leverage to increase the common dividend. First Commerce's stock rose 25 cents to close at $32.75.

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