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Zions Bancorporation announces corporate restructuring

Zions Bancorporation has 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

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.