By John Rogers
Tax reform passed by Congress last month in Washington is already having an impact locally. Zions Bancorporation has announced that as a result of the Tax Cuts and Jobs Act of 2017, it will increase ongoing compensation for more than 40 percent of its employees and reward 80 percent of its employees with $1,000 bonuses during 2018.
According to Rob Brough, executive vice president of marketing and communications, the Zions bonus program will cost the bank in the neighborhood of $8 million. That number comes from “giving 80 percent of our 10,000 employees $1,000 each,” he said.
Brough said that the bonuses would be paid toward the end of 2018, would be predicated on income level and given to employees currently on the job who are still with the bank at the end of the year. “No executives will receive bonuses,” he added. Zions executives, most of whom are corporate shareholders, will benefit “in the long run” from the anticipated increased value of bank stock, Brough said. Employee raises will go into effect immediately.
Zions joins other major corporations that have recently announced bonus and salary hike programs resulting from the passage of the tax reform legislation. Earlier announcements came from companies such as Wells Fargo Bank, U.S. Bank, AT&T and Comcast. Other companies have announced major investment in manufacturing infrastructure. Boeing, for example will put $300 million into upgrading its facilities.
While declining to state whether the bank politically supports the Trump administration and the actions of Congress, Brough said the bank believes the new tax law will benefit the majority of its small-business depositors, which represent a large percentage of the bank’s customers. “Our average small-business loan is about $200,000 and these are the businesses that will benefit” from the tax reform bill, Brough said.
Zions Bancorporation said it is in the process of assessing the financial impact of the tax law changes and intends to disclose such impact on or before the date that the company reports its earnings results for the fourth quarter of 2017 on Jan. 22, according to a press release.
Zions also said it intends to contribute $12 million to the Zions Bancorporation Foundation, which is expected to benefit local communities in which Zions does business. In 2017, foundation beneficiaries included the United Way, youth programs, food pantries, homeless shelters, affordable housing projects and educational programs. Zions expects to incur an increase in noninterest expense in the fourth quarter of 2017 of approximately $12 million as a result of the contribution to the foundation, while compensation adjustments are expected to be incorporated into 2018 expenses.
Zions Bancorporation is one of the nation’s premier financial services companies, with total assets in excess of $65 billion. Zions operates under local management teams and different brands in 11 western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming. The company is one of the nation’s top banks for Small Business Administration lending and public finance advisory services. Zions is included in the S&P 500 and NASDAQ Financial 100 indices.
Brough said that when Zions’ executives realized that the corporation would benefit from the changes in the tax laws, “we wanted to take care of our employees.” The new year looks bright for the bulk of those 10,000 people.