UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 1, 2015

ZIONS BANCORPORATION
(Exact name of registrant as specified in its charter)

UTAH
 
001-12307
 
87-0227400
(State of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
ONE SOUTH MAIN, 15th FLOOR,
SALT LAKE CITY, UTAH
 
84133
 
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code 801-524-4787

N/A
 
(Former name or former address, if changed since last report.)
 
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))
 
 





ITEM 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c)    Effective June 1, 2015, the Board of Directors of Zions Bancorporation (the “Company”) approved the appointment of Scott J. McLean as Chief Operating Officer of the Company. Mr. McLean will continue to serve in his current roles of President of the Company and Chairman of the Company’s subsidiary, Amegy Bank National Association. See the Company’s Proxy Statement filed with the Securities and Exchange Commission on April 9, 2015 for further information about compensation of the Company’s named executive officers, including Mr. McLean.

ITEM 7.01    Regulation FD Disclosure.
  
On June 1, 2015, the Company intends to distribute and make available to investors, and to post on its website, a written presentation regarding its corporate structure, expense and revenue initiatives, and forward-looking statements. The presentation is attached to this report as Exhibit 99.1. As announced in the press release attached as Exhibit 99.2, the Company will also hold a conference call to discuss these matters with the public.

ITEM 9.01    Financial Statements and Exhibits

(d)    Exhibits

Exhibit No.            Description

99.1        Zions Bancorporation presentation to investors

99.2        Press Release dated June 1, 2015



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
ZIONS BANCORPORATION
 
 
 
Date: June 1, 2015
By:
/s/ THOMAS E. LAURSEN
 
 
Name:   Thomas E. Laursen
 
 
Title:      Executive Vice President and
                    General Counsel   
 
 
 
 

 
 

 


June 1, 2015 Zions’ Path to Substantial Improvement of Profitability


 
Forward-Looking Statements & Peer Group Abbreviations This presentation contains statements that relate to the projected or modeled performance or condition of Zions Bancorporation and elements of or affecting such performance or condition, including statements with respect to forecasts, targets, opportunities, models, illustrations, scenarios, beliefs, plans, objectives, goals, guidance, expectations, anticipations or estimates, operational and financial initiatives and similar matters. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act. Actual facts, determinations, results or achievements may differ materially from the statements provided in this presentation since such statements involve significant known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: competitive pressures among financial institutions; economic, market and business conditions, either nationally, internationally, or locally in areas in which Zions Bancorporation conducts its operations, being less favorable than expected; changes in the interest rate environment reducing expected interest margins; changes in debt, equity and securities markets; adverse legislation or regulatory changes; Federal Reserve reviews of our annual capital plan; Zions’ ability to execute effectively and efficiently the initiatives described in this presentation; and other factors described in Zions Bancorporation’s most recent annual and quarterly reports. In addition, the statements contained in this presentation are based on facts and circumstances as understood by management of the company on the date of this presentation, which may change in the future. Except as required by law, Zions Bancorporation disclaims any obligation to update any statements or to publicly announce the result of any revisions to any of the forward- looking statements included herein to reflect future events, developments, determinations or understandings. 2 BAC: Bank of America Corporation BBT: BB&T Corporation CMA: Comerica Incorporated C: Citigroup Inc. FITB: Fifth Third Bancorp HBAN: Huntington Bancshares Incorporated JPM: JPMorgan Chase & Co. KEY: KeyCorp MTB: M&T Bank Corporation PNC: PNC Financial Services Group, Inc. RF: Regions Financial Corporation STI: SunTrust Banks, Inc. UB: UnionBanCal Corporation USB: U.S. Bancorp WFC: Wells Fargo & Company ZION: Zions Bancorporation


 
Today, Zions is announcing several organizational and operational changes, including: • Consolidate bank charters from seven to one while maintaining local leadership, local product pricing, and local brands • Create a Chief Banking Officer position, with responsibility for retail banking, wealth management, and residential mortgage lending • Consolidate risk functions, while emphasizing local credit decision-making • Consolidate various non-customer facing operations • Continue investment in building best-in-class technology infrastructure These changes are designed to: • Improve the customer experience (e.g., faster turnaround times) • Simplify the corporate structure and how Zions does business • Drive substantial positive operating leverage: + Increased revenue from growth in loans, deployment of cash to mortgage-backed securities, interest-rate swaps, and core fee income + Holding noninterest expense to below $1.6 billion in FY15 and FY16, slight increase in FY17 = Efficiency Ratio ≤ 70% in 2H15, ≤ 66% in FY16, and low 60s in FY171 3 Executive Summary 1 Assumes two 25 basis point fed funds rate increases by the end of 2017


 
Stepping Back in Time Historically, Zions produced superior returns on equity and efficiency ratio; lagging peers is a recent issue 4 0% 5% 10% 15% 20% 25% 2003-2007 Avg 2012-2014 Avg Return on Average Tangible Common Equity ZION Peer Median 50% 55% 60% 65% 70% 75% 80% 2003-2007 Avg 2012-2014 Avg Efficiency Ratio ZION Peer Median Source: SNL Financial


 
5 Positive Operating Leverage: Expenses Roadmap to Substantially Improving Profitability Four Expense Initiatives focused on creating “simple, easy, fast” operational processes and customer experience. 1) Technology1 • Simplify and reduce customization in core systems • Reduce 15 loan processing centers to two • Reduce loan data entry – moving to one “front-end” system • One general ledger used consistently across the enterprise 2) Charter Consolidation • Simplify capital and liquidity management • Reduce regulatory reporting • Reduce or eliminate duplicative risk management functions 3) Operations • Improve efficiency within branch operations • Eliminate duplication of wealth management / trust / brokerage platforms • Reduce and simplify accounting and other support functions 1 Technology initiative previously announced, although expected cost savings not previously described. Technological and Operational expense initiatives expected to result in $120 million of gross annual cost savings


 
6 Positive Operating Leverage: Expenses Roadmap to Substantially Improving Profitability 4) Financial: High cost debt & substantial portion of preferred equity • Financing costs already substantially reduced • Savings of $103 million on interest expense on debt FY14 vs. FY12 • Reduction of $99 million on preferred dividends paid FY14 vs. FY12 • Opportunity to reduce financing costs • Savings of ~$30 million from the retirement of subordinated debt in 2H15 • Reduction of ~$20 million from preferred stock dividends Financial initiatives previously communicated, but are a material component of the broad profitability improvement initiative


 
Positive Operating Leverage: Expenses Roadmap to Substantially Improving Profitability 7 • We expect to hold noninterest expense to below $1.60 billion in FY15 and FY16, slightly increasing in FY171 • Targeted FY17 Gross Cost Savings vs. FY14: • Operational Initiatives: $120 million • Maturing of subordinated (convertible and non- convertible) debt in 2H15: ~$30 million • Preferred Equity Dividends: ~$20 million Technology Charter Consolidation Operations -- Affiliate Banks Operations -- Bancorp Approximate distribution of $120 million gross savings from operational initiatives 1 Excluding severance, restructuring charges, tender premiums, and other similar items


 
8 Revenue Opportunities: Three Initiatives • Treasury / securities portfolio • Significantly asset sensitive – currently top decile within the industry • Capacity to add several billion dollars of mortgage-backed securities and interest-rate swaps • Expect to remain one of the more asset-sensitive U.S. banks • Fee income opportunities – newly created chief banking officer position focused on increasing fee income across retail banking, wealth management, and residential mortgage • Loan Growth: • Commercial & Industrial: Streamlined process to allow for more time spent developing business, without sacrificing credit quality • Commercial Real Estate – A natural strength of community banks, but subject to elevated losses under Fed’s CCAR model; Solution: currently developing syndication and loan sale platform • Residential: Recently completed overhaul of residential mortgage operations platform (2014), consolidated leadership of residential mortgage effort Positive Operating Leverage: Revenue Roadmap to Substantially Improving Profitability


 
9 Positive Operating Leverage Path to low 60% or Better Efficiency Ratio 76 % Low 60s FY14 Actual Normalized FY14 (1) Debt Reduction Savings from Operational, Technology and Charter Consolidation Balance Sheet Repositioning (e.g. MBS) Loan & Fee Income Growth Other Expense Increases (2) Pro Forma FY17 Efficiency Ratio Note: Savings from tech projects includes effect of increased depreciation after assets are placed into service. (1) Normalization: Securities Gains, Debt Extinguishment, Severance, Provision for Unfunded Commitments & FDIC-Supported Loans; (2) Includes normal salary increases, investment in growth businesses. Excl severance and related restructuring costs.


 
10 What Remains the Same Staying Local When It Comes to the Customer Experience • Maintain local brands as currently constituted • Continue with customer-centric model (rather than silo / product- centric model) • Local CEOs remain responsible for: • Client-facing bankers • Product pricing (e.g., loan, deposit, fees) • Achievement of revenue targets • Direct expense controls • Maintain regional advisory boards of directors – strong community presence • Zions is one of only four (4) U.S. banks that have been consistently awarded more than 10 Greenwich Excellence awards since 2009, when the first survey was conducted. • 24 Greenwich Excellence Awards in 2014 • Changes outlined should not disrupt what drives Zions to be ranked by its customers among the best in U.S. banking industry


 
11 Conclusion • Commitment to hold noninterest expense to below $1.60 billion annually through 2016, slightly increasing and with substantial positive operating leverage in 2017 • Targeting an increase of revenue through: • Deployment of cash into MBS • Drive fee income growth • Drive loan growth • Anticipating the reduction of debt • Expecting the reduction of preferred equity • Events that may work in Zions’ favor: • Congressional or regulatory changes • Interest rates increase, likely resulting in a material increase in Return on Tangible Common Equity • Self-Help Story: Targeting to achieve low 60s efficiency ratio and a substantial improvement of Return on Tangible Common Equity without such events


 
12 Appendix: Potential Benefits, Offsets and Risks to Achieve Targeted Profitability • Significant Factors Included in Outlook: • Continued competitive pricing on loans • Increased salary and benefits from normal cost of living adjustments and merit increases • Investment in growth businesses • Potential Benefits Not Included in Outlook: • Congressional or regulatory changes (e.g., Shelby or Luetkemeyer bills) • Substantial increase in interest rate environment • Potential Risks Not Included in Outlook: • Further flattening of the yield curve • Emergence of significantly adverse credit environment


 



ZIONS BANCORPORATION
Press Release
June 1, 2015





**FOR IMMEDIATE RELEASE**


FOR: ZIONS BANCORPORATION                
One South Main Street                        
Salt Lake City, Utah                            
Harris H. Simmons
Chairman/Chief Executive Officer
Contact: James Abbott
Tel: (801) 844-7637

ZIONS BANCORPORATION ANNOUNCES CORPORATE RESTRUCTURING
AND POSITIVE OPERATING LEVERAGE INITIATIVE

SALT LAKE CITY, June 1, 2015 - Today, Zions Bancorporation (NASDAQ: ZION) announced a corporate restructuring in conjunction with several expense and revenue initiatives that are expected to substantially improve the Company’s profitability metrics. An investor conference call will be held today at 5:00 p.m. Eastern Daylight Time to discuss this announcement (call details listed below). At the beginning of the call, a slide presentation will be furnished under Form 8-K to the Securities & Exchange Commission and will also be available at zionsbancorporation.com.

The organizational changes outlined below are designed to:
Improve the customer experience (e.g. faster turnaround times)
Simplify the corporate structure and remove associated costs
Drive substantial positive operating leverage

Key elements of today’s announcement include the following organizational changes:
Consolidate seven bank charters into a single legal charter (subject to regulatory approval), yet maintain local decision-making CEOs, local pricing of products and services, local credit authority, and local branding.
Create a Chief Banking Officer position, with responsibility for retail banking, wealth management, and residential mortgage lending.
Consolidate risk functions and various non-customer facing operations.






As was previously announced, Zions is continuing to invest in the overhaul and simplification of its technology infrastructure, which is integral to achieving the improved customer experience and certain gross cost savings and efficiency ratio targets announced today.

The following are the targeted financial performance outcomes of these organizational changes, and associated operational and technological initiatives:
Achieve an efficiency ratio in the low 60s by fiscal year 2017 driven by expense and revenue initiatives detailed below; the announced target assumes a slight increase in interest rates.
Increase returns on tangible common equity over the long term to double digit levels.
Maintain noninterest expense below $1.60 billion in 2015 and 2016, and increasing somewhat in 2017; this target excludes severance and other restructuring-related items.
Achieve gross pre-tax cost savings of $120 million annually from operational expense initiatives by fiscal year 2017: overhaul technology, consolidate legal charters, and improve operating efficiency across the Company.

Commenting on this announcement, Harris H. Simmons, chairman and chief executive officer stated: “This afternoon we are announcing several important organizational changes which will allow us to increase our profitability by streamlining our ability to get work done, and to remain competitive in a fast-changing banking industry. These changes include, most fundamentally, a modification to our bank charter structure; a strengthened enterprise-wide focus on retail banking; a reduction in the complexity of our risk management structure; and the consolidation of the management of some of our specialized businesses and support functions.”

Mr. Simmons continued, “Our goal is to create customer experiences and work processes that are ‘simple, easy, fast,’ while reaffirming our commitment to strong local management and community involvement that has distinguished Zions Bancorporation over the years.”

Revenue growth. In addition to the aforementioned cost savings, the Company intends to achieve moderate growth in revenue through loan and fee income growth. Consistent with previous announcements, Zions intends to moderately extend the duration of its balance sheet by deploying low-yielding cash into mortgage-backed securities and interest rate swaps.

Financing cost reduction. As has been previously communicated, the Company expects to achieve pre-tax cost savings of approximately $30 million annually through the maturity of subordinated debt in the second half of 2015. Additionally, as has also been previously communicated, over the next several





quarters the Company expects to achieve a reduction of approximately $20 million of annual dividends on preferred equity. These financial elements are important components in achieving the stated profitability objectives.

In conjunction with the changes announced today, the following management changes have also been made:
Scott J. McLean, who has served over the past year as President of Zions Bancorporation, has been additionally given the title of Chief Operating Officer, reflecting his continuing responsibilities for the oversight of Technology and Operations, Legal, Human Resources, the execution of transformational change projects, chairman of Amegy Bank, and his leadership in a variety of other corporate initiatives.
Keith D. Maio, who has served as President and CEO of National Bank of Arizona, assumes the position of EVP and Chief Banking Officer for Zions Bancorporation, with overall responsibility for the Company’s Retail Banking, Residential Mortgage and Wealth Management businesses. Mr. Maio will continue to hold the title of Chairman of National Bank of Arizona.
LeeAnne B. Linderman, who has served as EVP and Executive Director of Retail and Omni-channel Banking at Zions Bank, assumes the title of EVP, Retail Banking, for Zions Bancorporation, and has been named a new member of Zions Bancorporation’s Executive Management Committee.
Mark Young, who has served as EVP and Executive Director of Real Estate at National Bank of Arizona, becomes President and CEO of National Bank of Arizona, and has been named a new member of Zions Bancorporation’s Executive Management Committee.

In addition to the organizational changes and performance initiatives announced today, Zions is announcing the continued reduction of its portfolio of collateralized debt obligation securities (“CDOs”). Quarter-to-date, it has sold $81 million of amortized cost of CDOs, realizing a pre-tax loss of $25 million; this loss rate is generally consistent with the estimated fair value of the securities at March 31, 2015, as disclosed in Zions’ first quarter 2015 Form 10-Q. Zions intends to continue to sell the remaining CDOs in an orderly fashion if and as market conditions remain conducive to such sales. If all securities were sold at the estimated fair value at March 31, 2015, Zions would expect to realize a pre-tax loss of approximately $149 million. If realized, the loss would result in a reduction of nominal risk-based capital ratios of approximately 0.2 percentage points, but should improve Zions’ financial performance under an adverse economic scenario.

To join in the discussion of this announcement, participants should call 253-237-1247 (domestic and international) and enter the passcode 58680674, or visit zionsbancorporation.com to join by webcast. The webcast of the conference call will also be archived and available for 30 days.
Zions Bancorporation is one of the nation's premier financial services companies, consisting of a collection of great banks in select western U.S. markets with combined total assets exceeding $55 billion. Zions operates its banking businesses under local management teams and community identities in 11 western and southwestern states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon,





Texas, Utah, Washington and Wyoming. The company is a national leader in Small Business Administration lending and is a consistent recipient of numerous Greenwich Excellence awards in banking. In addition, Zions is included in the S&P 500 and NASDAQ Financial 100 indices. Investor information and links to subsidiary banks can be accessed at www.zionsbancorporation.com.
Forward-Looking Information
Statements in this press release that are based on other than historical data or that express the Company’s expectations, goals, targets, and operational objectives and initiatives regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations, goals, targets, the intended outcome of certain operational initiatives or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include but are not limited to factors discussed in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s Internet site (http://www.sec.gov).
Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
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