Zions Bancorp. and First Security Corp. have decided to put decades of independent competition behind them in the interest of size and survival.

The Salt Lake City rivals agreed over the weekend to a $5.9 billion merger deal that would create a $40 billion-asset company. To be called First Security Corp. and stretch across 10 states, it would be the second- largest bank with headquarters in the West, behind only $201.4 billion- asset Wells Fargo & Co. of San Francisco.

"This is the best possible way to prepare for the future out West and puts us in a strong position to be a real player," Spencer F. Eccles, chairman and chief executive officer of First Security, said in an interview Monday.

The new First Security is likely to dominate Utah banking even after divesting units to satisfy expected demands by antitrust authorities. And the merger would likely have a less dramatic impact in states that First Security and Zions have expanded into in recent years.

First Security would still be dwarfed by its competitors in California, where its $6.3 billion of deposits compares with $53.3 billion for Wells Fargo and $89.7 billion for Charlotte, N.C.-based Bank of America Corp.

Mr. Eccles and Zions' president and chief executive officer, Harris H. Simmons, would be co-CEOs of the new company. The board of directors would have 11 members from each side.

But all business lines would report to Mr. Simmons, 44, who would become the sole CEO after Mr. Eccles, 64, pares his responsibilities back to those of chairman in 2002.

Analysts said the new bank would have a virtual competitive lock on markets in Utah and Idaho, where most of its assets would lie. First Security had assets of $20.4 billion at yearend 1998, and Zions, $17 billion.

"You are getting a company that has big market share in several states, but the new First Security is going to be really tough to compete with in Utah and Idaho," said James R. Bradshaw, an analyst with Pacific Crest Securities in Portland, Ore.

Because of the heavy market concentration in Utah, the deal is expected to require significant divestitures. The banks said about $1.5 billion of deposits would be sold.

The combined bank would likely shutter an estimated 40 branches and sell roughly 50, analysts said. They expect the bank to cut 2,000 jobs, or 12% of the total work force.

Though the consolidation will be a new and substantial challenge for the banks, analysts said, the banks would not experience the kind of customer loss and deposit runoff that sometimes accompanies in-market mergers.

"Zions has a very, very sharp management team," said R. Jay Tejera, an analyst with Ragen MacKenzie Inc. in Seattle. "They will probably handle this well-as long as they don't lose account numbers in Salt Lake City."

In an interview, Mr. Simmons said the increase in convenience offered by the merged bank would more than compensate for branch closures.

"Even with the consolidation of branches, we will mitigate the customer losses you sometimes see in other deals with the convenience and products we offer to so many people in Utah," Mr. Simmons said.

"We've been such an integral part of every community that this will be well received by both borrowers and depositors," Mr. Eccles said.

The deal, which was approved by both companies' boards on Sunday, surprised many in the investment community. Both Mr. Eccles and Mr. Simmons have repeatedly stated a wish to remain independent.

"For years we've said this deal makes all the sense in the world, but for social and political reasons we thought it would never come together," said Mr. Bradshaw of Pacific Crest Securities.

Mr. Eccles' independent-mindedness may have dampened recent rumors about a takeover, which were sparked by First Security's recently lagging stock price (First Security stocks soared 19% Monday, to $24.375 per share; Zions fell 10% per share, to $58.5937).

But rapid industry consolidation and the forthcoming elimination of pooling-of-interest accounting intensified the pressure for a merger, according to the CEOs.

"The economics work, the accounting rules still work, and who know if the opportunity would still be there down the road?" Mr. Simmons said.

Outside of Utah, the two banking companies' networks have little overlap. Analysts said Zions' and First Security's business lines and out- of-state presences are complementary and would add up to a new power on the western banking scene.

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