"We are generally quite pleased with the first-quarter results. Many of the trends were strong either on a relative basis, such as loan growth, or on an absolute basis, such as charge-offs," CEO Harris Simmons said during a conference call with analysts.
As the quarter started, loans actually declined. But demand picked up in March, and the bank ended the quarter with a $148 million gain over the fourth quarter of last year.
Still, the bank is feeling the effects of the sluggish recovery. Although loans rose to $37.7 billion from $37.1 billion three months earlier, demand is still weak, Simmons said.
"March was a strong month," he said. "I say strong, relative to what you are seeing from some other banks these days."
Simmons said Zions' loan officers "remain positive" about prospects for loan growth in coming quarters. The bank's commercial customers seem more optimistic than they were six months ago. Although demand appears to be strengthening, interest rates have weakened recently. That suggests net interest income the bank's biggest source of profits may not improve this year, he said.
Gross loan charge-offs fell 35 percent from the fourth quarter. The decline allowed Zions to add back $29 million that had been set aside to cover bad loans.
Acknowledging that shareholders have been clamoring for a higher dividend, the bank last week raised the quarterly return from 1 cent per share to 4 cents.
"We hoped to modestly increase the dividend, and so now we've begun that process," Simmons said.
Zions released its financial results after the close of the stock market. Its shares closed at $23.61, down 10 cents, and fell another 3 cents in after-hours trading.