First Interstate Loses $344 Million in Quarter : Earnings: The Los Angeles-based bank cited persistent troubles at its Texas subsidiary. Great Western also recorded a quarterly loss as it suffered from real estate problems.

First Interstate Bancorp, battered by continuing loan problems in its troubled Texas unit, on Monday reported a larger-than-expected $344.3-million loss in the fourth quarter and a total deficit of $124.5 million for the year.

Separately, another major Southern California financial institution, Great Western Financial, blamed real estate problems for its $77.3-million loss in the quarter. Despite the fourth-quarter loss, the Beverly Hills-based parent of Great Western Bank posted a profit for the year of $100 million, down 60% from $248 million earned in 1988.

First Interstate’s quarterly loss, which contrasts with a $144-million profit earned a year earlier, exceeded predictions by several securities analysts after the Los Angeles-based banking company’s disclosure last month that it would allocate $400 million largely for its reserves to cover possible losses on problem real estate in Texas. The 1989 loss contrasted with a $129.4-million profit earned in 1988.

First Interstate’s earnings report comes less than one week after the company disclosed plans by Joseph J. Pinola to retire as chairman and chief executive on June 1, to be succeeded by First Interstate President Edward M. Carson.

Both moves were expected, although some speculated that the announcement was moved up to placate investors who have grown impatient with Pinola and the firm’s string of unexpectedly large problems in Texas and Arizona during the past two years.

The fourth-quarter loss reflects continuing problems stemming from First Interstate’s acquisition in early 1988 of Allied Bancshares, which got into trouble when the Texas oil boom turned into a bust in the mid-1980s. Top First Interstate executives, including Pinola, now acknowledge that the acquisition was a mistake and that they failed to adequately evaluate the bank’s condition before buying it.

First Interstate acquired the bank without federal assistance. Competitors such as NCNB of Charlotte, N.C., and Banc One of Columbus, Ohio, later acquired banks in Texas with federal assistance. Those units are outperforming First Interstate’s operation. Indeed, NCNB last week attributed its strong earnings performance largely to its Texas unit.

In addition, First Interstate has consistently misjudged the depth of its problem in Texas, a factor that securities analysts and real estate experts say makes it difficult to tell if the latest moves are adequate to deal with its problems. The real estate projects that Allied became involved with generally were not large, high-quality office projects. That market is recovering the fastest in Texas.

Thomas P. Marrie, First Interstate executive vice president and chief financial officer, restated First Interstate’s position that it believes it has taken adequate reserves and is in a position to move ahead in Texas to make the unit profitable. In Texas, he said, reserves total $520 million, while non-performing assets--loans 90 days past due or ones that are likely to go bad--total $489 million.

Marrie said First Interstate now owns $907 million in real estate as a result of foreclosures, or property that is clearly headed for foreclosure. That is up from $635 million at the end of the third quarter. He said First Interstate is working to sell those properties, or negotiating with borrowers so that they can make payments on the loans.

The announcement of the fourth-quarter loss comes as First Interstate’s investment bankers continue efforts to raise $400 million to replenish its capital. The bank has said that it wants to sell 7.5 million shares of stock, but analysts believe that it may have to sell more than that to raise the money it wants.

That would further dilute the holdings of shareholders at a time when institutional investors, who own 70% of the stock, are increasing disillusioned. Since August, First Interstate’s stock has plunged from about $70 a share to $44.625. It rose 62.5 cents in Monday’s trading on the New York Stock Exchange.

First Interstate’s plunging stock price, combined with periodic comments from Wells Fargo Chairman Carl E. Reichardt that he would like to buy the banking firm, has renewed speculation that First Interstate may be a good takeover candidate.

The fourth-quarter loss by Great Western was not unexpected. The Beverly Hills-based thrift had previously disclosed that it would set aside $200 million for problem loans, largely ones on apartment and commercial projects such as office buildings, in Texas, Florida and Arizona.

In the year-ago fourth quarter, Great Western earned $59.7 million.