First Interstate Reports a 53% Drop in Profit
California financial institutions on Wednesday continued to report lower first-quarter earnings, attributable in part to the state’s economic slowdown.
But stocks of banks and thrifts kept rising, which securities analysts interpreted as a sign that the latest results are easing investor fears about real estate-related problems facing the state’s banks.
First Interstate Bancorp, which has been predicting a slower 1991, said its first-quarter earnings fell to $59.6 million, a 53% drop from the year-ago period. The Los Angeles-based banking firm cited slower loan demand and weaker real estate markets.
First Interstate’s non-performing loans--those more than 90 days past due or where interest collection is in doubt--fell $258 million from a year earlier, to $1.8 billion. About 75% of those loans are real estate-related.
Despite the earnings drop, First Interstate’s stock rose $1.50 a share to close at $36 in New York Stock Exchange trading Wednesday.
Beverly Hills-based Great Western Financial said its first-quarter profit fell 7% to $69.2 million from $74.2 million in the year-earlier quarter.
The parent of Great Western Bank cited a slowing of loan volume, slightly higher loan delinquencies and higher expenses, caused in part by its recent acquisition of thrifts in Florida and California from the federal Resolution Trust Corp.
Great Western’s stock also rose despite the earnings drop, closing up 37.5 cents a share at $18.25.
Stock prices of two giant California banks, Wells Fargo & Co. and Security Pacific Corp., which both reported lower earnings on Tuesday, also continued to rise. Wells Fargo stock finished up $4.375 per share at $84.375, while Security Pacific rose 75 cents per share to close at $27.
BankAmerica, California’s largest bank, is scheduled to release its earnings today.
Elsewhere, Charlotte, N.C.-based NCNB Corp. reported an 8.3% decline in quarterly earnings to $128.4 million as the bank boosted by $70.7 million its reserve for possible loan losses. Continental Bank Corp. in Chicago saw its earnings drop to $32 million from $57 million a year earlier.
But Republic New York Corp., which has benefited from its 1990 acquisition of Manhattan Savings Bank, saw its profit rise 23% to $54.7 million.
