SALT LAKE CITY, June 16, 2015 /PRNewswire/ -- Today, Zions Bancorporation (NASDAQ: ZION) (the "Company") announced that it has sold the remainder of its collateralized debt obligation securities ("CDOs"). The sale of the securities is expected to substantially reduce modeled risk to capital, particularly under severely adverse economic scenarios.
During the second quarter of 2015, the Company sold a total of $574 million (amortized cost) of CDOs for proceeds of $437 million, generating a realized pre-tax loss of $137 million. Prior to these sales, the Company received paydowns and payoffs of approximately $13 million in the second quarter of 2015. The value achieved through the sales represents a moderate improvement relative to the carrying value as of March 31, 2015, which reflected an unrealized loss of $149 million. Zions previously announced that it had sold $81 million of CDOs through June 1, which is included in the $574 million total for the quarter. Of note, because the unrealized loss of $149 million was included in GAAP capital as of March 31, 2015, the exit from the CDOs at a somewhat better value is slightly accretive to pro forma GAAP book value and capital ratios.
Pro Forma Regulatory Capital Impact
As a result of this transaction, Zions would expect a slight increase to its pro forma March 31, 2015 regulatory capital ratios. The realized loss on the securities adversely impacts the regulatory capital level; however, the securities had a weighted average risk weighting of 178% and accounted for approximately 2% of the Company's $46.3 billion of risk-weighted assets at March 31. Therefore, the net reduction of capital is more than offset by the reduction of risk-weighted assets and should have a slightly beneficial effect on the Company's regulatory capital ratios.
Expected Earnings Impact
The annual interest income from these securities was approximately $9 million, which is expected to be replaced in the near term with additional purchases of U.S. agency mortgage-backed securities.
About Zions Bancorporation
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.
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.
SOURCE Zions Bancorporation