First Interstate Sued After Move to Bolster Reserve
A Pennsylvania law firm said Monday that it has filed a class-action lawsuit against First Interstate Bancorp in connection with the bank’s disclosure Thursday that it will make a $180-million addition to its reserves to cover loan losses at its Texas subsidiary.
The firm of Greenfield & Chimicles of Haverford, Pa., which specializes in shareholder litigation, said it had brought the suit on behalf of people who had bought the stock of Los Angeles-based First Interstate between Jan. 1, 1986, and the present. Richard D. Greenfield of the firm said litigation is necessary to recover investor losses.
First Interstate bought troubled Allied Bancshares of Texas earlier this year and changed its name to First Interstate Bank of Texas. Since then, analysts said last week, losses have been higher than expected.
Simon Barker-Benfield, a spokesman for First Interstate, said Monday that the bank has not been served with any papers related to the lawsuit. “We’re basically responding to a press release,” he said. “Therefore, it would be difficult to make an intelligent comment.”
The suit was filed Friday in U.S. District Court.