After receiving partial approval for its new capital plan from
the Federal Reserve,
) commenced with the implementation of the same. Consequently,
the company announced its plans to redeem Series B Trust
Preferred Securities (TruPS).
The company will redeem 8% Series B TruPS comprising 11.4 million
shares. Collectively, these securities have a liquidation value
of $285 million. The redemption is scheduled on May 3, 2013.
Zions has fixed the price of redemption of its securities at 100%
of the liquidation amount which equals to $25 per share. The
company will pay this redemption price along with the
distributions outstanding and due on the securities up to the
date of redemption to its shareholders.
In Mar 2013, the Fed partially approved Zions' Capital Plan, due
to which the company is required to re-submit its capital plan
after incorporating a few amendments. The capital plan includes
the redemption of Series C perpetual preferred stock worth $600
million and subordinated debt and senior debt worth $250 million.
In addition, Zions plans to issue $600 million of additional
perpetual preferred stock that includes $171 million worth of
Series G preferred shares, which have been issued in Feb 2013.
Further, Zions has sought to redeem Series C shares worth $798
million. Also, management is keen on receiving approval to issue
an additional perpetual preferred stock worth $200 million to
fully redeem the Series C stock.
Apart from Zions, other financial institutions that have
implemented their capital plans after receiving the Fed's
Bank of America Corporation
). Citigroup plans to redeem TruPS worth $3 billion. On the other
hand, BofA will be redeeming 8.20%, Series H, non-cumulative
preferred stock and 8.625%, Series 8, non-cumulative preferred
The redemption of the TruPS is expected to auger well for Zions
as it will provide an opportunity to the bank to reduce its
interest expenses and will help in restructuring the balance
Zions currently carries a Zacks Rank #3 (Hold). Among others,
American River Bankshares
) is a better performing bank with a Zacks Rank #2 (Buy).
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ZIONS BANCORP (ZION): Free Stock Analysis
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