SEC Probes First Interstate Over $400-Million Reserve

First Interstate Bancorp said Thursday that the Securities and Exchange Commission launched an informal inquiry related to the $400 million that the bank set aside last December largely to deal with its problem-plagued Texas unit.

The intent of the inquiry wasn’t disclosed, but when banks or other firms set aside large sums to cover potential losses, questions are often raised about whether adequate and timely disclosures were made.

A First Interstate spokesman called the inquiry routine. He quoted from a Jan. 8 letter from an SEC staff member in Washington that said the request should not be taken as “an indication by the commission or its staff that any violation of law has occurred” nor that it reflects wrongdoing by any person at the bank.

The Los Angeles-based banking company has been plagued by problems with its units in Texas, where it made the untimely acquisition of ailing Allied Bancshares in early 1988, and in Arizona, where it has been hurt by that state’s soft real estate market.

In December, First Interstate disclosed that it would set aside $400 million in provisions largely to deal with problem real estate loans in Texas. Two months earlier, First Interstate disclosed a $350-million provision for real estate problems in Arizona. Those moves resulted in a $124.5-million loss for First Interstate in 1989.

The Arizona provision was made after a review by officials from the Office of the Comptroller of the Currency. First Interstate disclosed Thursday that its Arizona unit must abide by unspecified rules related to its lending practices and other matters, under an agreement reached in January with the regulators.

First Interstate is trying to sell 7.5 million shares to replenish its capital, the financial cushion that banks maintain against losses.

As it does, institutional investors and securities analysts are growing increasingly critical of how its management has disclosed its problems, complaining that the bank has surprised them too often over the past two years.

Some investors and analysts were especially angry when the Texas problems were disclosed just weeks after the Arizona announcements. They contend that the bank should have disclosed all of its problems at once.

Bank executives in previous interviews have denied that there was any intent to space out the announcements. Last month, the bank disclosed that Joseph J. Pinola, who has taken the brunt of the criticism, will retire on June 1, to be succeeded by Edward M. Carson, the company’s president.