2 California Banks Post Hefty Gains : Earnings: First Interstate’s second-quarter profit more than doubled; Wells Fargo’s surged 82%. But two S&Ls; see declines.

Two of the state’s major banking companies--First Interstate Bancorp and Wells Fargo & Co.--reported hefty gains in second-quarter profit Tuesday as they continued to benefit from fewer problem loans and favorable interest rate trends.

The gains were led by Los Angeles-based First Interstate, which said its earnings in the quarter ended June 30 more than doubled from a year earlier. Wells Fargo’s profit surged 82%, while several other major banks nationwide also reported strong earnings, including Citicorp, Chemical Banking, Nationsbank and Banc One.

But two major California-based savings and loans--Great Western Financial in Chatsworth and Coast Savings Financial in Los Angeles--said their second-quarter profits fell 24% and 23%, respectively, even though they continued to reduce troubled loans on their books.

The overall results mirrored the performance turned in by financial institutions in the first quarter of 1993, with banks showing rapid improvement and some big thrifts continuing to struggle.

Wall Street gave the bank results a lukewarm greeting amid analysts’ suggestions that investors are worried that the earnings gains will now begin to slow. Wells Fargo rose $2 a share to $109.25, and First Interstate inched up 12.5 cents to $64.625, but prices of several other bank stocks fell.

Banks are benefiting from relatively low market interest rates, which have widened profit margins between what the banks pay on deposits and what they charge on loans or earn on securities. In addition, they have generally moved quickly to sell or write off loans on which borrowers have defaulted.

Banks such as First Interstate also operate in many states, and those outlying operations help offset their problem real estate loans in California.

By contrast, the savings and loans continue to be hampered by having much of their cash plowed into real estate loans in Southern California, now in its fourth year of recession.

Charlotte Chamberlain, an analyst with Wedbush Morgan Securities in Los Angeles, said thrifts such as Great Western are under pressure to follow the step taken Monday by H.F. Ahmanson & Co., parent of Home Savings of America, the nation’s largest S&L.;

Ahmanson said it sold a $1.2-billion package of troubled loans at a discount to the investment firm of Bear Stearns. Although the sale and other factors will leave Ahmanson with a record second-quarter loss of about $290 million, the action immediately slashed the company’s problem assets.

Great Western spokesman Ian Campbell said that “we certainly would not rule out the possibility of doing a bulk” sale like Ahmanson, but he declined to comment on whether such a sale is imminent.

Some of the bank earnings reported Tuesday:

* First Interstate, extending its strong rebound from huge losses of two years ago, said its second-quarter net income jumped to $136 million from $64.5 million a year earlier.

First Interstate, which operates in 13 Western states, said it also has cut its non-performing, or delinquent, loans and other assets to 1.15% of its total assets of $49.5 billion as of June 30, down from 2.5% a year earlier. The bank said it expects to further cut its problem loans to 1% of assets by year-end.

For the first half of 1993, First Interstate’s profit soared to $440 million from $125 million a year earlier.

* Wells Fargo, based in San Francisco, said second-quarter earnings climbed to $149 million from $82 million a year ago. Profit swelled as Wells Fargo cut its provision for loan losses to $140 million from $300 million in the year-earlier quarter.

“This marks the third consecutive quarter in which our loan-loss provision has declined,” Chairman Carl E. Reichardt said in a statement.

For the six months ended June 30, Wells Fargo’s profit rose to $257 million from $201 million a year earlier.

* Great Western said second-quarter profit dropped to $52.6 million from $69 million a year earlier.

The company’s provision for loan losses rose to $85.5 million, up from $60 million a year ago, although Great Western said it has pared its non-performing assets to 5.01% of its $38.2 billion in total assets, from 5.17% three months earlier.

* Coast Savings’ profit fell to $5.13 million from $6.67 million a year earlier. Nonetheless, Coast has reduced its problem assets to 3.04% of its total assets--which were $8.3 billion as of June 30--from 4.16% a year earlier. The thrift noted that it has cut its troubled loans for nine straight quarters.