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Cost Controls Working, First Interstate Says; Stock Jumps

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Times Staff Writer

First Interstate Bancorp’s stock price shot to a new high in heavy trading Thursday following an upbeat prognosis from its chairman for the Los Angeles banking company.

The stock closed at $57.50 on the New York Stock Exchange, its highest level in the past 52 weeks and an increase of $2.375 over Wednesday’s close. More than 914,000 shares were traded, very heavy volume for First Interstate.

On Wednesday, Joseph J. Pinola, the company’s chairman and chief executive, told a meeting of 600 institutional investors in New York that efforts to reduce costs overall and to control problems with its Texas bank were promising.

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While Pinola did not disclose any new strategies, his remarks were well received by many of the investors and apparently triggered Thursday’s heavy buying, according to a bank spokesman.

Has Had Weak Earnings

The conference was sponsored by Sanford C. Bernstein & Co., a New York investment bank. Ronald Mandle, the firm’s banking industry analyst, said Pinola was more adamant than ever about the need to rebuild the stock price and replenish capital as quickly as possible.

Weak earnings, stemming chiefly from problems at its First Interstate of Texas unit, have plagued the company in recent quarters and created speculation that it might be vulnerable to a takeover in 1991, when California opens its doors to full interstate banking.

First Interstate, the parent of First Interstate Bank of California, has been trying to reduce costs and focus on consumer and business banking over the past year. For instance, in recent months the company has consolidated 10 data processing facilities into six and cut sharply its level of loans to Third World countries.

The stock, however, has been slow to respond in the past and investor concerns have focused principally on problems with the company’s domestic loan portfolio, particularly Texas.

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