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Loan Income Pushes First Interstate's Profit Up 44%

October 18, 1994|From Bloomberg Business News

First Interstate Bancorp said Monday that third-quarter profit from operations rose 44% on increased income from loans.

The Los Angeles bank said profit from operations was $216.2 million, or $2.54 a share, up from year-earlier net income of $150.5 million, or $1.80 a share. In the latest quarter, a charge for consolidating operations made net income $130 million, or $1.49 a share.

The figure beat the mean estimate of $2.35 a share from 16 analysts surveyed by Zacks Investment Research.

First Interstate's shares closed up 87.5 cents at $81.125 on the New York Stock Exchange.

The charge for cutting more than 3,000 jobs, or almost 11% of its work force, and closing redundant operations amounted to $86.2 million, or $1.05 a share, in the quarter.

The cuts will position First Interstate for nationwide banking and "will move us closer to the final step that will take First Interstate from a company of banks to a single banking company," said Edward Carson, chairman and chief executive.

The company's income from making loans and charging fees, or net interest income and non-interest income, improved in the third quarter from a year earlier.

Net interest income rose to $601.8 million from $528.1 million, mostly because of a rise in net loans, to $30.3 billion from $26 billion. Non-interest income rose to $281 million from $239 million, partly because of gains in service charges on deposit accounts and fees from trust operations.

Non-interest expenses rose to $667.8 million from $507.5 million a year earlier. The expenses include the charge from cutting staff and closing operations.

The company took no provision for loan losses in the third quarter, compared to $21.9 million a year earlier.

In the first nine months, net income fell to $522.3 million, or $6.09 a share, from $590.7 million, or $7.20, a year ago.

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