Third-quarter earnings at Zions (ZION) more than tripled from a year earlier after the company bought back a series of preferred stock.

The Salt Lake City company reported income of $209.7 million, compared with $62.3 million for the same period a year earlier. Earnings per share totaled $1.12, beating analysts' expectations polled by Bloomberg by 70 cents.

Zions, which has $55.5 billion of assets, redeemed $800 million of its series C preferred stock with lower-cost funds. The redemption increased net earnings by $126 million after tax, or 68 cents per share. Overall the company completed several debt and equity transactions during the third quarter as part of its efforts to reduce cost of capital and debt financing, Zions said Monday.

"We are encouraged with the cumulative progress made in reducing the cost of our capital, and expect that this will contribute to future improvement in our return on equity," Harris H. Simmons, chairman and chief executive officer, said in a news release.

Credit quality also continued to improve. Zions recorded a credit of $5.6 million for its provision for loan losses, compared with a credit of $1.9 million a year earlier. Net chargeoffs totaled $8.7 million, down 77% from a year earlier.

Total loans rose almost 3%, to $38.3 billion, from a year earlier. Consumer loans increased nearly 6%, to $7.6 billion, while its commercial loans climbed almost 4%, to $20.1 billion. Commercial real estate loans rose less than 1%, to $10.2 billion.

Net interest income fell roughly 5%, to $415.5 million, from a year earlier because of lower income from Federal Deposit Insurance Corp.-supported loans. Noninterest income totaled $122.2 million, down more than 2% from a year earlier as the company recorded a bigger impairment loss on its investment securities.

"Net loan growth, although not significantly different from the industry, was disappointing despite an increase in production volume and unfunded lending commitments over the prior quarter, as prepayment activity remained high," Simmons said. "Nevertheless, the strength of our funding base continued to improve, with average noninterest-bearing deposits reaching 40% of average total deposits."

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