Good day, ladies and gentlemen and welcome to your Zions Bancorporation First Quarter 2014 Earnings Call. At this time all participants will be in a listen-only mode but later there will be a chance to ask questions and instructions will be given at that time (Operator Instructions) And as a reminder today’s conference is being recorded. And now I would like to turn it over to your host James Abbott.

Good evening, and thanks, John. We welcome you to this conference call to discuss our first quarter 2014 earnings. Our primary participants today will be Harris Simmons, Chairman and Chief Executive Officer; and Doyle Arnold, Vice Chairman and Chief Financial Officer. I would like to remind you that during this call we will be making forward-looking statements, although actual results may differ materially. We encourage you to review the disclaimer in the press release dealing with forward-looking information, which applies equally to statements made in this call. A copy of the earnings release is available at zionsbancorporation.com. We intend to limit the length of this call to one hour, which will include time for you to ask questions. (Operator Instructions). With that I will now turn it over to Harris.

Thanks very much, James, and welcome all of you who are on the call today. I would start by saying that we are generally pleased with most of the facets of the quarterly results. And especially pleased with the significant reduction in our CDO exposure which has been a long time coming. It represents a significant improvement to the risk profile of the company. However, our comprehensive capital analysis and review or CCAR results have been probably much more impactful to our recent stock price than the actual fundamental results we're announcing today will be -- I'll address that briefly recognizing the communications with the regulators is required to be kept confidential. But what I can say is that as we announced on March 20, under the results published by the Federal Reserve under the hypothetical severely adverse economic stress scenario in the Dodd Frank Act stress test to the DFAST test run by the -- as it was run by the Federal Reserve, Zions' capital ratios would not have met the minimum requirements under the Federal Reserve's capital adequacy rules. The credit loss rates that were rejected by the Federal Reserve's model for Zions were broadly similar to the loss rates projected for other CCAR banks, even if they were much higher than the loss rates that we projected. However, the Federal Reserve's models projected much lower pretax pre-provision net revenue than for other banks relative to the run-rates immediately prior to the beginning of the stress test period. And those rates were much lower than Zions' experienced in 2008 through 2010 recession. Our own models produced significantly different results from those of the Federal Reserve. We remain quite confident that under an actual severely adverse economic environment and with no access to the capital markets Zions would remain…

Thanks, Harris. Good afternoon and good evening everyone. For the first quarter of 2014, as noted in the press release we posted net earnings applicable to common shareholders of $76.2 million or $0.41 per diluted common share. That compares to a net loss of $59.4 million or $0.32 per diluted common share in the fourth quarter. I'm sure you'll recall that the fourth quarter results included two particularly significant items, namely the impairment of a portion of the CDO securities related to the Volcker rule as it then applied and the debt extinguishment charge which reduced earnings by $0.74 a share. Those items did not reoccur in the first quarter. However in the first quarter we did recognize a $31 million pretax gain on fixed income securities or about $0.10 a share, as discussed in the release and I will touch on again later that related to the substantial de-risking of the CDO portfolio sales that Harris mentioned. Zion’s net interest income was in line with consensus expectations. Non-interest income and expense variances largely offset each other. The primary variants between the consensus estimate of $0.42 a share and the GAAP EPS of -- that we reported of $0.41, less the $0.10 gain on securities sold would appear to involve two main factors. A smaller amount of reserve released this quarter and a higher preferred stock dividend than we had perhaps led you to expect, I will touch on that in a minute. The relatively small reserve released does not reflect any change in our outlook about credit quality and barring some unforeseen change we currently anticipate somewhat larger reserve releases in the next couple of quarters. The higher preferred stock dividend is attributed to the issuance in 2013 of two series of preferred stock on which the dividend payments…

(Operator Instructions). And we’ll take our first question from Ken Zerbe from Morgan Stanley. Ken please go ahead.

Hey, Ken. Ken?

Sorry. I was on mute.

Okay.

Quick question for you, in terms of, Doyle you mentioned that you're lessening the duration of your equity, but you mentioned swaps, can you just address a little bit more like how do you guys think about investing the cash, just an outright move from fed funds into say MBS versus swaps and why not do that versus the swaps?

Well, as you could do -- you can actually do neither, either or both. We are mindful of the LCR ratio and we have far less than the total amount of cash is truly free. I mean we could deploy it into treasury securities without penalty but if you deploy it even in the mortgage bag share I think incurring some penalty on the LCR, not to mention the interest rate risk negatives can actually associated with that. So you know we actually have to -- we and all banks we are going to have to remain much more liquid than we have in the past and we have chosen to keep a lot of it in very short term cash. The swaps are -- I mean it’s pretty straight forward. You could do interest rate swaps on loans, take floating rate prime or LIBOR-based and swap for received fixed contracts. We have done a little bit of that or even to do the opposite, make the opposite trade on your own debt and we have done, are in process doing a little bit of that. Again we don't want to give up the entire asset sensitive position, certainly not in this interest rate environment and we certainly don't want to lock away a lot of cash and very long duration assets with negative convexity risk. So that’s kind of the way we’re thinking about it. Anybody of my colleagues want to come? Okay, I am getting all good on our end. How about your end, Ken?

Yeah, I think I was good on the swaps right now. Just as a follow-up, the fee line you mentioned that it was going to increase modestly but I guess this quarter it sort of declined a fair bit more than what we are looking forward. When you talk about a modest increase in fees is that adjusting for seasonality or should we assume a step-up in fees next quarter and then increase modestly or is it really increasing off of this lower base at a slow pace. Thanks.

Yes, it’s a hard one there. I think it’s fair to say we were a little surprised that, I don't know if weaknesses is the right word but just the fact that fee income was just a little soft to our normal lines, that’s not our real expectation. Going forward as we have talked about we are putting a whole lot of effort in to growing wealth management, mortgage lending, treasury management and some other things like that. So we are a bit surprised that it didn't show up a little more here. I would hope that -- I think our hope is that this is not a new base from which we have to claw back with a little bit of softness. Of course you know the big line -- the fair value non-hedged derivative line, that’s the swap, the TRS is a big driver of that line. So that negative line will be a whole lot smaller next quarter. Anybody you want to comment any further on that, Okay.

Okay, so sounds like your data, your fee line shouldn't be that materially different from the industry because I think there has been a pretty big trend of everyone fees being a lot weaker and everyone expecting higher fees in second quarter, it sounds like you are pretty much in line with the rest of the banks in that regard, aside from the TRS of course.

Yeah, I will take your word for it because I just haven't had time to study the others and I know you've been absorbed with them, so I'll take a word for you.

All right. Fair enough, thank you very much.

Thank you, sir. And we'll take our next question from Brad Milsaps from Sandler O'Neill & Partners LP.

Hello, Brad. Brad? Might be on mute.

If you could just check your mute button, your line is open.

Why don't we take somebody else and go back to Brad.

Yeah, we'll go with the next question from Craig Siegenthaler from Credit Suisse.

Thanks, guys. May be just to hit on CRE first, you guys put a pretty decent construction loan growth, can you give us any detail on what type of loans you are adding and also what type of loans you are running off, whether they are going to life insurance industry or CNBS Conduits?

We're going to let Michael Morris, our Chief Credit Officer field that one for you, Craig.

Thanks. Most of the CRE balance growth has come from construction loans put on through the cycle. We're not seeing the kind of commitment increases in CRE that we've seen in balances and those are just loan balances that are catching up, a lot of that was multi-family. We feel good about our multi-family exposure and so the CRE balance growth that you've seen are mostly, I would say 2012-2013 vintage. They are now starting to ripen, starting to stabilize and will be moving to term. With respect to the take out markets, it is competitive. We do see term loans roll off, some of which we would prefer would stay but it's very competitive on the rate side and we are, as you probably know a recourse lender and most of the life companies and CNBS lenders and Conduits offer non-recourse loans. And then are the GSEs and the agencies, they are doing most of the multi-family and that's very tough to compete with.

Thanks, and just a follow up. Can you give us what the actual yield was on loans you added in the first quarter and also give us a range for the loan to value ratios?

Craig, are you referring to commercial real estate?

So aggregate commercial real estate, which includes construction.

So I've got -- Craig I can give it to you on -- I've got it broken down by commercial term and then construction but on term it was an overall yield of about 370.

And that was on new loan.

On new in production, on term commercial real estate. And on construction the yield on -- in production for the quarter was about 350.

And any color on LTVs?

Weighted average LTV of the existing portfolio, which would include construction is going to be somewhere in the 60s somewhere in the mid-60s. We are seeing may be a little bit on the new loan growth, little higher advance rate, perhaps pushing 70.

All right, great guys. Thanks for taking my questions.

Thank you. And our next question comes from Ken Usdin from Jefferies LLC. Ken, please go ahead. Kenneth M. Usdin - Jefferies & Company LLC: Yeah, thanks. Good afternoon guys. Harris, just to follow on your points, understanding that your conversations with the regulators about CCAR are confidential but just from a process perspective, just wondering as you think about what you guys are going to have to do in your re-submission do you have an understanding of when you'll be able to resubmit, what quarter or quarters of earnings you will be able to count from the original submission date and just how you are just kind of thinking of the process and how it might be different from the original submission?

I think I could say that it's kind of start of the -- core stress period is January 1st. And so it captures everything that took place during the fourth quarter as well as I said earlier we expect some impact of all of the security sales that took place during the first quarter as well as the impact of the interim final rule on the Volcker rule that was republished in mid-January. So those are basically elements -- we're at work on preparing the resubmission and so we have the scenario and…

It does involve a new scenario provided by the fed as-well-as new ones -- this is Doyle -- created by us. And we will -- I think our submission will be in the next few weeks, possibly next week but the federal reserve then has under its rule 75 days to say we object or we do not object to what was proposed in the new plan. And so you may not get -- you and we may not find out exactly what we're going to do here until early in the third quarter. Could come -- if they speed up their process it could come, we might have an answer sometime in the latter part of the second quarter. Kenneth M. Usdin - Jefferies & Company LLC: Okay, and then just given that we haven't had a public forum for you guys since that time, the $400 million -- that you mentioned in your press release that was part of your original submission, does that have any bearing or necessarily inclusion in what you end up resubmitting as far as potential capital actions that you might take to comply in your resubmission?

I'd say it's a resubmission, so it's really a new submission with new capital actions et cetera. So we're still sorting through that. But it doesn't -- the 400 is not necessarily binding on us. It's not a starting point from which to start the new one. Kenneth M. Usdin - Jefferies & Company LLC: Right. So I guess the question that lot of people are just asking is how do we start to understand the various mechanisms by which you might be thinking through in terms of either combo or some balance of factors to close that gap between 3%, 6% and 5%?

Well. The -- if you take the original submission the 3%, 6% without the capital raise that's -- you can calculate how much that was, we had $400 million in the original and you can calculate the size of the whole. What we're not going to tell you is what we think the whole might be that we need to fill a [FINI] and the resubmission that's going to be between us and the fed until it's done. What we've told you is that one big contributing factor several hundred million so the whole would probably projected losses on the CDO portfolio and we believe that we have substantially eliminated that part of it by selling over $900 million of those securities that were calculated I believed by us to have the highest risk of stress losses in these scenarios. But it's a new calculation, a new scenario, we will tell you the answer when we know the answer I guess and I know that's probably an unsatisfying, it's been unsatisfying to us but that's just the process. Kenneth M. Usdin - Jefferies & Company LLC: Okay, understood. Thanks guys.

Thanks.

Thank you. And our next question comes from Dave Rochester from Deutsche Bank. Dave, please go ahead.

Hey. Good afternoon guys.

Hello, Dave.

Sorry if you already mentioned this but I was just wondering have you guys considered filing for an extension for your resubmission, is that something that you can pursue?

We can. I am just curious as to why you think we -- maybe you could tell us why we should?

Well I guess it would give you more time to do some risk reducing actions, that's the first thing that came to my mind.

Well. At this point if we -- as Harris mentioned the starting point for the resubmission, both because we requested it after almost in conjunction with the original submission because of the expectation that the interim final rule would be published, might change everything but formally I think it was February we requested a resubmission. We had even and we were, we are already engaged with the fed on that. Had we not have the shortfall on the DFAST test we would have been required to resubmit anyway. In both cases I believe the start date is the December 31 balance sheet. If we extend too far it's yet another resubmission with a new balance sheet date, nothing that we could do to de-risk today would count unless we rolled all the way forward to June 30th which I think might start to strain the federal reserve's patience and reasonably so. I mean it will be very hard to do something like that as under our understanding of the rules.

Okay, got you, that's very helpful. And just switching gears back to the CRE line, it's a nice growth there. I was just wondering can update us on where the national real estate portfolio sits today, what the change was in that portfolio of this quarter and how much run-offs you are still expecting there?

It did have run-offs. We're all kind of looking at ourselves, it's getting to be a smaller amount. We think it's around $2.8 billion and I believe the run-off was probably in the $100 million and $150 million range this quarter, lower into that range, closer to $100 million.

Okay, great thanks guys appreciate it.

Thank you. And our next question comes from Keith Murray from ISI. Keith, please go ahead.

Thank you. Could you just touch a minute on the net interest income give up from CDO sales, could you box that in for us? And does your guidance on NII include any additional or contemplate any additional CDO sales there?

Yeah, a lot of the CDOs that we sold because they were among the riskier once were non-performing and so we weren't accruing. So we only reported a total of about $2 million of interest income in the first quarter on the securities that were sold. So thus the impact should not be particularly material --

It's about half a day's worth of interest.

That address your -- and what I don’t know is if we sold some of -- some accruing securities before their accrual date but that you took that into account, yeah. So it's not material.

Okay, thank you and then just going back to CCAR first again, is there anything that you've seen or understand your back and forth with the Fed that would make you revisit strategic decisions of how particular businesses are run or structured at this point in time?

Well I think -- I'll tell you and I tried to allude to this in the opening remarks, we're probably puzzled frankly by the magnitude of the drop in pretax pre-provision net revenue. And we don’t have any real transparency into how they arrived at that number. We don't -- it's a number that is astonishingly large, I think relevant to other -- certainly other regional banks

It's small, the PPR…

Well the drop, the size of the decline is large the amount of the PPR is small, in other words and so I guess the answer to the question is no, it doesn't really lead us to any conclusions that are particularly useful.

Fair enough, thank you very much.

Thank you. And our next question is from Marty Mosby from Guggenheim. Marty, please go head.

Hi, thanks for taking my question. On the provision side what you are saying is the total losses were very low, you don't see any real deterioration in the asset quality metrics but we are going from a release, significant release I think a meaningful release to very little this quarter just matching the total loss and going back up next quarter what was the thought process for the world this quarter and then the rebound that you are kind of highlighting going into the future quarters?

It’s fairly arcane. We had as you -- we didn’t really highlight it in the talking points but there was a slight uptick in classified loans although all the other metrics were stable to improving but there was a slight uptick in classified loans. There were couple of fairly large credits at Amegy and at [inaudible] California that had a downgrade and that classified status makes a big jump in the quantitative portion of the reserve calculation but for that we would have had reserve releases probably similar to what you have seen in the prior quarter. We actually debated a lot about changing the qualitative factors to just not lean into the wind for all the reasons going to the qualitative factors as much but we decided to wait for one more kind of quarter's evidence and not do it just to offset the classified uptick. So it was a fairly and by the way and we don't think that the classified uptick is at all indicative of a trend so kind of just decided to wait another quarter and see how things develop but we are pretty confident that the general release trend will resume at that point.

Got you. And just kind of a real technical question on the fair value and non-hedged derivative loss, like you said TRS kind of flips that around. Was there anything in that $8.5 million this quarter that was related to closing out the swap? I mean is that higher because they are something that all of a sudden popped because that’s about $3 million higher than usual.

Yes there was actually about $2 million true up of one of the three legs of the swap related to the original forecast moves in LIBOR versus what actually occurred. So yes the total TRS cost this first quarter was more like $7.4 million instead of the usual $5.2 million to $5.4 million and then as I mentioned that will go to about $0.5 million in the second quarter for the stub period and then zero thereafter.

Okay that’s all I wanted. Thanks.

Thank you. And we’ll take our next question coming from John Pancari from Evercore. John, please go ahead. John Pancari – Evercore Partners: Good afternoon.

Hi, John. John Pancari – Evercore Partners: To go back to the CCAR again, sorry do you necessarily need to wait until you hear back from the fed to raise capital if you decide to do so?

No we -- well yes actually we do. We need technically under the capital plan rule any distributions of capital or any capital actions which were any raise of capital must be approved by the fed. We do have approval from the fed to raise the capital that was in the first submission so I guess we could go ahead and do that amount or up to that amount if we chose to but I think our posture is probably to let this process play out a bit more and make sure we’re on the right track with them. John Pancari – Evercore Partners: Okay, all right. That makes sense. And then separately how do you think about how much of a buffer you think you will need over that 5%? So I know with your original expectation of that $400 million, you baked in a degree of a buffer over the minimum 5% so how you are thinking about it now in terms of meeting the minimum under the updated CCAR results?

Do you have our conference rooms bugged? John Pancari – Evercore Partners: Yes.

I mean, that’s the issue because I mean as Harris mentioned there is a very large difference between what our PPNR models would project and what federal reserve’s model would project or did project in the original submission. We know a lot about how our models work. The fed publishes as you know very-very little about how its models work. So yeah I mean we in the absence of any other information we have to think very long and hard about -- basically assume the fed will get to a number somewhere in the second round if it does as it did it in the first and we will see it accordingly that is the dilemma here. John Pancari – Evercore Partners: All right, okay. And then I guess related lastly just on the CCAR still. I want to find out how are you thinking about the other actions as you're evaluating outside of a common equity raise and outside of CDO sales. I know you've thought about potentially selling or even securitizing commercial real-estate going forward. Can you talk about that a little bit how realistic of a possibility is that?

Well. We -- I mean as I mentioned we're already constrained in our loan growth by self-imposed concentration limits. So those limits are self-imposed in part because of the severity of losses that would be projected by us in particularly land development construction lending. But it appears that the federal reserve's projections are even far, far more severe. So we do have to manage that risk but yet we've got a lot of really good customers and a lot of really good people out originating -- capable of originating good quality business. So we're looking at a variety of avenues, developing a more substantial and better organized syndications capability to originate and sell so we can continue to serve customers while laying off the risk or parts of it not, keeping all of it on our balance sheet. We're looking at the possibility of some originate flow origination partnerships with one or more parties and we're looking at ways to buy protection from people on some of the risk or stop loss coverage if you will. Nothing is eminent but it's clearly in a CCAR governing, stress test governing world it's something that we have to pursue very seriously and we're. John Pancari – Evercore Partners: Okay. Thanks Doyle.

Yeah.

Thank you. And our next come from Joe Morford from RBC Capital Markets.

Hi, Joe.

Thanks. Good afternoon everyone. I was just curious about your thoughts on the DTA and to recapture some of that. I'd like, I guess given that your now selling more of the CDOs could the write- off be less from that as you also think about filling the hole and -- would be needed?

Yes. I mean the answer is yes the DTA was reduced, I think by around $80 million by the security sales and I think it's in the ball park of that number. And that should that's DTA that won't reappear in our stress test, so yes. And in effect the securities sales kind of had an after tax impact on stress losses because of the DTA write off in the stress. I am kind of -- if you don't know what we're Joe and I are talking about. I realized I didn't say all that very clearly I am sorry.

Well I apologize for taking you down that path but I was curious. I also was wondering if you had any color on kind of geographic trends in loan growth this quarter.

Who's got geographic trends? James you got a fancy chart for that or Michael.

We actually did. We've got -- Joe I have got -- and part of this is we've got some bank selling participation's from one bank to the other but when you see the call report data you will see that Zions Bank and also Commerce Bank, Washington with strengths on the C&I front. On commercial real estate the biggest strength came from California and also Texas was the strongest out of those two. Both of them experienced actually pretty good term commercial real estate growth but also it's California's good construction funding's as Michael Morris spoke to earlier. Consumer book we did see a pretty good growth in most of the affiliate banks on the consumer side and that bodes pretty well for us. I would say while we are talking about it that on the consumer front we saw about a 25% reduction in origination volume on residential mortgage that was originated for sales. So it's a little bit softer quarter from that perspective that also fed in to the fee income line earlier but that gives you little bit of color around the footprint.

Okay, that's great. Thank you so much.

Sorry about my babbling on the DTA, Joe.

I will follow up with James, thanks though.

Thank you. And we'll take our next question from David Long from Raymond James. David, please go ahead.

Good afternoon, guys.

Hi, David.

So following up on the geographical question you talked about concentration limits and some types and some geographies can you expand on that and provide any more color?

I don't think we want to get into what property types we might be holding back in which markets. We don’t want to put our guys to the competitive disadvantage. I think you will kind of agree with us on that one.

Okay.

I would say that generally we still have some room but it's I mean there are pockets geographically in some product types. But I would suspect that's not different from what you find in lot of other banks candidly.

Okay, and then as the follow-up regarding the high cost debt that you still have outstanding, can you pre-pay that without issuing like capital, is there an opportunity to do that at this point or is that put on the back burner till we get more clarity, late second quarter, early third quarter on the CCAR results?

No, debt is debt, it's not capital. I mean in our sub debt it was once tier 2 capital effectively is not. We can't pre-pay it in the sense that we tendered last year for high cost senior debt, we retired a little over half of it that way we tendered in the fourth quarter for sub debt. We've got some of that brought in. But at this point the rest of it will just come as it matures. There is just under $250 million of senior notes that cost us effectively 11.25%, that mature in September and we will pay those off with cash that we currently have on hand for back to the question how you're going to deploy the cash, that's a quarter of a billion of it. We have one issue of sub-debt that matures in May, it's less than $100 million. We'll pay that off with cash currently on hand. The effective cost on that debt because of the discount amortization, when we modified it, is north of 20%. So it's very -- it's not a lot of it left outstanding but it's quite expensive and then the last of the really expensive debt is two more issues of subordinated debt that mature in, I think it's third quarter, second and third quarter of next year, September of next year, again costing us north of 20% and there is I believe in total $250 million or so of that.

We've also called four or five issues this quarter, that's about 130 million.

First quarter?

The second quarter.

Okay. Does that address your question?

Yes. That's great thanks guys.

Okay, did we ever get back to Brad, who was -- okay let's keep going. John?

Okay, we'll take our next question from Jennifer Demba from SunTrust Robinson.

Thank you, good evening. Most of my questions have been covered but I am curious what was the seasonal impact of expenses this quarter higher payroll et cetera?

Yes, about $7 million.

Okay. Thanks so much.

You're welcome Jennifer.

Maybe we have time for one more question.

Okay. So we'll take our next question from [Jeffrey Elliot]. Jeffrey, please go ahead.

Hello there. On the CDO sales could you run through the total capital release that you've achieved so far and how much more potential there is just from reducing the Basel III risk weighted assets by selling down the CDOs?

The capital release really came in the form of stress capital release. The CDOs, well we sold some CDOs later in the quarter that were insurance only that were performing very-very well. In a perfect world we probably would have liked to held on to most of those but they were Volcker Rule prohibited even after the Interim Final Rule. But the stuff that we sold apart from that was going -- that which was projected to a result in the largest amount of OTTI in a severe stress environment that is other than temporary impairment which effects regulatory capital and I will remind you that the question what Joe Morford was asking about deferred tax asset because the losses were in total were severe enough in federal reserve severely adverse projections. It appears they wrote off entirely or disallowed our DTA which meant that all of that OTTI dollar for dollar had an after tax impact on capital. If you go back to what the fed published in the DFAST results securities losses were little over $300 million and we would have and that’s a direct hit to capital. We would expect that that would be -- by our calculation we reduced that to somewhere near zero by the securities that were sold.

Okay.

That helped?

That helped. So the balances…

I’ll say since you asked about Basel III we have also -- we also had an impact to mostly other tier 1 and tier 2 capital from the corresponding deductions approach because of this rather large portfolio and again essentially that’s a dollar we have eliminated not all but a lot of that deductions from other tier 1 and tier 2 capital in the Basel III calculation by selling down the portfolio and [by the way] maybe that’s what you are getting at when you ask the Basel III question. I am not sure.

Okay so the impact is on the numerator with a pretty small impact on the denominator then?

Yes, well, on tier 1 comment it’s a big impact on the numerator and it’s not that big impact on the denominator but in the Basel III calculation it’s an even bigger impact on the numerator in the non-common tier 1 because of the corresponding deductions approach.

Great, thanks very much.

Okay.

I think that’s it, John. At this point we’ve reached the end of our hour and so we thank everyone for their time on the call today and if you have any further questions please feel free to follow up James Abbott and I will be happy to get in touch with you. Thanks so much everyone.

Thanks you everybody. We’ll see you again in three months.

Okay, ladies and gentlemen, thank you for your participation. You may now disconnect and have a great day.