Zions Bancorp. reported a loss of $86 million in the first quarter, significantly beating expectations and suggesting the company may have put the worst of its credit troubles behind it.

Zions' bottom line amounted to a loss of 57 cents per share, according to results released late Monday afternoon. Analysts had predicted a loss of 95 cents per share.

Its chargeoffs fell 30 percent from the prior quarter, to $248 million. Loss severity decreased across most asset categories, and improvements were particularly marked in Zions' collateralized debt obligation portfolio. Though the company booked $31 million in losses on CDOs, that amount was less than a third of the hit it took in the fourth quarter.

Likewise, the company's assets in troubled areas such as commercial real estate and construction development dropped significantly. Zions' net interest margin also rose to 4%, from 3.8% to in the fourth quarter.

Tempering the good news was the continued high level of nonperforming loans - they now stand at $2.5 billion - and a continued runoff of Zions' overall lending portfolio.

"The results have strengthened our view that we should return to profitability on a pretax basis later this year," said Harris Simmons, Zions' CEO.

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