First Interstate in Red; World Savings Gains

First Interstate Bancorp, as expected, posted a second-quarter loss of $80.3 million because of increasing real estate loan problems in Oregon, Nevada and California.

Separately, Golden West Financial, the Oakland-based parent of World Savings & Loan, said its second-quarter results rose 25% to $61.7 million. For the first six months, Golden West earned $114.3 million, up 19% from a year earlier. Golden West, one of the nation’s strongest thrifts and a specialist in making home loans, said a comeback in the housing market helped boost the second-quarter results.

In Los Angeles, First Interstate Chief Executive Edward M. Carson said the company was “truly disappointed” with the second-quarter results, but he added that First Interstate is making progress toward improving loan quality and increasing its financial strength.

The results were not a surprise because the bank had disclosed in an announcement earlier this month that it would post the loss.

First Interstate’s quarterly loss contrasted with a profit of $95.1 million a year earlier. As expected, First Interstate set aside $295 million for potential losses on loans.

For the first six months of the year, First Interstate lost $20.6 million, contrasted with a profit of $222.3 million in the year-earlier period.

Other bank earnings reported Wednesday included:

* Fleet/Norstar Financial’s profit fell 48% to $27.9 million. The Rhode Island banking firm said it is still being affected by recession but added that the growth in problem loans is slowing.

* Continental Bank, Chicago, reported a $31-million profit, contrasted with a loss of $57 million a year earlier. The bank described its earnings, however, as “flat” and said its customers continue to be affected by the slow economy.