A rally in bank stocks coupled with increasing confidence in the recovery of the California economy has propelled First Interstate Bancorp's stock close to its 52-week high.
The stock cooled off Tuesday after setting a blistering pace over the previous three trading sessions. First Interstate's stock was off $tktk at $tktk by the close of trading.
Prior to that, however, First Interstate shot up nearly $7, to $80 at the close of trading Monday, from $73.75 at the close last Wednesday. The 52-week high for First Interstate was $83.875
Analysts said a broad-based rally has accelerated the bank's rise.
The American Banker bank index was up 7.51% during the past month, and 4.19% in the week ending Tuesday. The Standard & Poor's index rose 4.58% for the month and 2.83% for the week.
"The whole (California bank) group was on fire starting on Friday," said Carole Berger of Salomon Brothers Inc. "You are starting to see some confidence that California's economy has seen the worst."
She said that First Interstate, Bank of America Corp. and Wells Fargo & Co. all will benefit by this investor confidence.
Two weeks ago, after a positive teleconference with First Interstate executives, Raphael Soifer of Brown Brothers Harriman & Co. upgraded his 1995 earnings estimates to $11.25 a share, from $10.60.
"The industry has been strong in the wake of a strong bond market," he said. "It's a broad-based rally. First Interstate has had a background of positive news lately. I think it's just the rally dragging them along."
First Interstate also is expected to realize as much as a 7% increase in pretax income when the Federal Deposit Insurance Corp. cuts banks insurance premiums later this year.
