Last week, the Federal Reserve notified
) that it had approved certain strategic actions of its capital
plan, which was submitted in regard to the Fed's 2013 Capital
Plan and Review (CapPR). However, Zions will be required to
re-submit its capital plan after making a few amendments.
The Fed has approved all the strategic actions pertaining to the
reduction of cost and quantity of Zions' non-common capital as
well as term-debt financing. These actions include redemptions of
Series B trust preferred securities, $600 million worth of Series
C perpetual preferred stock and $250 million worth of
subordinated debt and senior debt.
In addition, Zions is looking forward to issue $600 million of
additional perpetual preferred stock that includes $171 million
of Series G preferred shares already issued in Feb 2013. Further,
the company is planning certain other issuances.
Under its plan, Zions had sought to redeem $798 million of Series
C shares. Also, management is keen to ask for an approval to
issue an additional perpetual preferred stock worth $200 million
to fully redeem the Series C stock.
Last year, the Fed had approved Zions' capital plan. Majority of
the actions involved the company's effort to repay Troubled Asset
Relief Program (TARP) dues. Additionally, Zions had announced the
issuance of $600 million of senior debt, redemption of Temporary
Liquidity Guarantee Program (TLGP) debt of $255 million on its
maturity in June and an unchanged quarterly dividend of 1 cent
per share throughout 2012.
The current capital plan may not seem very attractive as it has
little to enhance shareholder value. However, over the long-term,
this plan will prove highly beneficial as it aims at
restructuring the balance sheet and cost reduction. Moreover,
this plan is at par with Zions' strategy to rationalize its
balance sheet and reduce overall cost.
Zions currently carries a Zacks Rank #3 (Hold). Among other banks
in the West,
Columbia Banking System Inc.
Western Alliance Bancorporation
BBCN Bancorp, Inc.
) are performing well and are worth considering. Columbia and
Western Alliance retain a Zacks Rank #1 (Strong Buy), whereas
BBCN Bancorp holds a Rank #2 (Buy).
BBCN BANCORP (BBCN): Free Stock Analysis
COLUMBIA BK SYS (COLB): Free Stock Analysis
WESTERN ALLIANC (WAL): Free Stock Analysis
ZIONS BANCORP (ZION): Free Stock Analysis
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