In the wake of their $5.9 billion merger announcement in June, Zions Bancorp. and First Security Corp. await word from the Justice Department on how many branches and how much in deposits they must divest to ease antitrust concerns.
Observers estimate that the two Salt Lake City-based banking companies would have to sell about $1.5 billion of deposits and 50 branches. As many as 2,000 jobs or 12% of the combined companies' work force could be cut.
Harris H. Simmons, Zions' president and chief executive officer, would become co-CEO of the new First Security when the deal closes. Though he would share the title with First Security's current chairman and CEO, Spencer F. Eccles, all business lines would report to Mr. Simmons.
In San Francisco last week to meet with the management of First Security Van Kasper, the investment bank acquired by First Security in February, Mr. Simmons sat down with American Banker to discuss his thoughts on the personnel issues surrounding the merger and the possibility of future acquisitions.
The Justice Department is expected to require significant branch closings in Salt Lake City. How are you keeping employees up to date on merger news, and what are you doing to keep their morale from flagging?
We jointly put out a newsletter every two weeks called "New Partners" that gives as much information as possible on the merger. We also have a hot line where people can leave questions, which we try to answer as candidly as we can. It's tough, because you have to do it prudently; you have to think about how the information you're giving out affects people.
Last month we let people know what kind of severance plan we'll be offering, even though no job cuts have been announced yet, just so they can think about it. It's not change per se that freezes people up it's uncertainty that lingers longer than necessary.
Zions and First Security have been Salt Lake City rivals for years. Is it easy to set aside that fact and instead concentrate on becoming one company?
We have been really pleased so far about how people have worked together across the organizations. We have cross-organizational teams put together to work on the merger, and in about 80% of the cases, people have exceeded expectations in terms of leaving our history at the door and moving forward.
In a process like this, you come to value unselfishness people's willingness to engage in change even if it means losing control of something that they were in charge of before. We've been really pleased with what we've seen so far.
While First Security is the one we've seen out our window for years, Utah is really incredibly competitive beyond that hometown rivalry. Our attorneys pulled together some interesting information for Justice. You have the hometown rivalry of Zions and First Security, but you also have four of the 15 largest banks in the nation here: Keycorp, U.S. Bancorp, Wells Fargo & Co., and Bank One Corp. For the most part, they are no slouches they are really strong in middle-market and small-business lending. And most of them entered the market by acquiring really solid local franchises.
If you look at other cross-town mergers, they don't end up with the same amount of competition that we do from the top 15 banks in the nation. The Fleet Financial Group and BankBoston Corp. merger doesn't face that kind of competition, for example. So it's not like we were the last two banks standing in town when this merger came up.
Are you actively pursuing other bank acquisitions, even though you are in the midst of the biggest merger of your career?
People are continuing to come to us with potential deals, but we haven't really been looking. That said, if we did do a deal, the economics would have to be very attractive and could not distract the people who are involved with the heavy lifting of the integration. So our goal would not be to establish targets so much as to look at an opportunity and ask, "Does this fit?"
Are there any obvious areas in Zions and First Security's combined franchise where acquisitions would make sense now?
Arizona is one state where we could do some in-fill and not be distracted from the merger. Our operations there are on a Marshall & Ilsley platform (Milwaukee-based Marshall & Ilsley Corp. provides banks with outsourcing technology services), so we'd have a third party dealing with any integrations. In California there really isn't any overlap between First Security and Zions, so opportunities there are still possible as well. But this is all very far down the list in terms of priority.