First Interstate’s Net Is Up Slightly

Los Angeles-based First Interstate Bancorp reported flat first-quarter profit but made significant progress in reining in its bad loans and cutting costs.

The nation’s 11th-largest banking firm posted earnings of $60.6 million in the three months ended March 31, compared to $59.6 million in 1991’s first quarter. But the bank said its problem assets fell by $305 million to $1.48 billion from a year ago.

Meanwhile, expenses fell $82.8 million, or nearly 13%, from a year earlier. First Interstate has sharply trimmed costs by cutting staff. The bank employed 28,306 full-time workers in March, down 18% from year-earlier levels.

On Wednesday, First Interstate’s stock jumped $1.75 to $40.75, a 52-week high, on the New York Stock Exchange.

Some are betting that it could be a takeover target of such potential bank suitors as Wells Fargo & Co., Norwest or Banc One. First Interstate is considering getting backing in the acquisition game by teaming up with the investment firm Kohlberg Kravis Roberts & Co. for a possible bid on ailing First City Bancorp in Houston.

Elsewhere, San Francisco-based Sumitomo Bank of California’s profit fell 43% to $7.9 million, reflecting an increase in money set aside to cover problem loans as well as a one-time accounting adjustment.

Separately, Coast Savings Financial of Los Angeles reported earnings of $13.8 million, up from $2.9 million a year earlier, mainly because of a $10.9-million gain from an accounting change.