Zions Bancorp. (ZION) in Salt Lake City reported lower quarterly earnings after its net interest income dipped.

The $55.4 billion-asset company's first-quarter earnings fell 14% from a year earlier, to $76.2 million, or 41 cents a share.

Net interest income fell almost 4% from the fourth quarter and 1% from a year earlier, to $416 million. The decrease from the fourth quarter was mainly because of lower interest income of roughly $10 million in loans supported by the Federal Deposit Insurance Corp. The net interest margin compressed 13 basis points from a year earlier, to 3.31%.

The company recorded a pretax gain of about $31 million tied to the sale of collateralized debt obligation securities during the first quarter. Total loans increased by almost 4% from a year earlier, to $39.2 billion.

Continued improvement in credit quality also helped Zions’ bottom line. The company recorded a negative loan-loss provision of $610,000 in the first quarter, and gross chargeoffs fell to their lowest level since 2007.

"We are pleased with the successful reduction in our CDO securities portfolio, which improved the company's risk profile while also improving both its tangible and Tier 1 common equity levels," Harris Simmons, Zions' chairman and chief executive, said in a press release, adding that many of the CDOs were sold at prices that were higher than those recorded at Dec. 31.

"After a strong fourth quarter, our first quarter loan growth was somewhat slower," Simmons said. "However, our capital levels continue to improve and we are optimistic as we look at the underlying economic strength within our footprint."

Zions was one of five banks to have its capital plan rejected by the Federal Reserve Board last month. The company failed to meet the Fed's minimum Tier 1 common capital ratio under a hypothetical severely adverse economic scenario.

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