Zions Bancorp's (NASDAQ: ZION) first quarter earnings of $0.48 per share were good enough to push the stock up just over 2% in early trading this morning, but that earnings tally is in the past. What's really important about Zions' release was what it says about the future, and I think that investors have three reasons it is now an even better buy than it was before.

1. Continued asset quality improvement
At the end of the fourth quarter, nonperforming lending-related assets were $745.6 million, accounting for just under 2% of total loans and leases on the balance sheet. Both of these numbers declined again during the first quarter, with total nonperforming lending-related assets down 8% to $684 million, or 1.8% of total loans and leases. Lending activity during the quarter also helped to improve the nonperforming loan ratio, with total loans and leases increasing a increasing a modest $148 million.

2. Net interest margin
As I stated in my preview from last week, limiting the decrease in net interest margin to under ten basis points should be considered a victory for the bank, especially in the current interest rate environment. The bank managed to do this, with net interest margin declining to 3.47% from the end of the last quarter, a decline of only three basis points. CEO Harris H. Simmons expects to see continued pressure on this aspect of the business, but further expects "continued bottom line improvement" by taking actions over the next several quarters regarding the cost of capital. 

3. Increased dividend
Technically, the earnings release did not mention of a higher dividend, but the bank did announce last Friday that it was increasing its quarterly dividend to $0.04 per share, up from its nominal dividend of $0.01. The bank still has quite some ways to go before its dividend reaches its pre-crisis level of $0.43 per share, but an increase should make investors happy nonetheless.


Fool contributor Robert Eberhard has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.