Most midsize banks and thrifts in the West reported improved earnings in the first quarter, thanks to healthy revenue growth and asset quality.

But one, Salt Lake City-based First Security Corp., bucked the trend by reporting per-share earnings six cents below consensus estimates, a shortfall attributed to slower than expected revenue growth and cost cutting.

Though its total earnings rose 1.9% from the 1995 first quarter, to $36.3 million, investors reacted coolly to First Security, driving down its stock price by 9% on April 16, the day earnings were announced, to $24.12. Its stock has since risen to a range near $25.

Bank stock analysts said that, though First Security's report was among the most disappointing of the quarter, investors overreacted.

The most disappointing part of First Security's results, analysts said, was its sluggish revenue growth. Average loans grew only 0.15%, to $8.25 billion, well below the annual growth rate of 6% to 8% that analysts expect for a bank with operations in Utah, Nevada, Idaho, and New Mexico - some of the fastest-growing states in the country.

First Security's net interest margin also came in unexpectedly low at 4.37%, compared to 4.57% in the fourth quarter.

Analysts attributed the slow loan growth to an intensive cost-cutting program, called Project Vision. Some 442 full-time jobs were dropped in the first quarter, leaving the bank with a staff of 7,088. Job cuts are expected to total 1,577 this year, creating an atmosphere in which it may be hard to generate sales enthusiasm.

Expenses at $12.7 billion-asset First Security declined 6% from the fourth quarter, despite an increase in job-termination costs and mortgage payroll expenses.

Earnings at San Francisco-based Unionbancal Corp. jumped 46.6%, to $60.5 million, and 32% at Seattle-based Washington Mutual Inc., to $59.5 million.

Analysts said Unionbancal's earnings were solid in most areas. The company reported a 14.4% increase in loans from the year-earlier period and a 1.4% increase from the fourth quarter. Net interest income rose 8%, to $220 million, and noninterest income excluding investment securities gains and losses rose 7.9% from the previous quarter, to $65.3 million.

Some analysts were disturbed by pro forma results for the merger of Union Bank and Bank of California, which closed April 1, increasing Union's asset size from $20.5 billion to $28.5 billion.

Per-share earnings for the combined bank would have been 11% below those for Union alone. Since the merger was prompted by the combination of the two banks' Japanese parents, Bank of Tokyo and Mitsubishi Bank Ltd., some analysts thought the California merger should have been structured in a way to minimize earnings dilution.

"There is simply no justification for this permanent erosion of the value of minority shareholder ownership," Hancock Institutional Equity Services Inc. analyst James Marks wrote in a note to investors.

Stock representing a 20% stake in Unionbancal is publicly traded.

Washington Mutual, like other big thrifts, benefited from a cyclical increase in net interest margins. Its margin rose 11 basis points from last year's first quarter, to 3.26%. The company also reported positive results from its push into commercial banking. It added a net 20,000 checking accounts in the quarter, to bring its total above 500,000.

Los Angeles-based Cal Fed Bancorp enjoyed a 180% increase in net income, to $23.2 million, thanks to a cyclical increase in its interest rate spread, rising sales of alternative investment products, and increased originations and purchases of mortgage loans.

Glendale Federal Bank had a 50% decline in net income, to $20.4 million. Without several nonrecurring items, including sale of $695 million of collateralized mortgage obligations, the sale last year of its Washington subsidiary, and an exchange of common stock for preferred stock, earnings would have risen 46%, to $16.4 million.

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