Watch the Rising Provision
So just how much is First Interstate Bancorp setting aside for problem loans in the second quarter?
The correct answer is $295 million, but that was hard to tell from the company's announcement Monday. The number never appeared in the press release. Instead, Los Angeles-based First Interstate said that there "would be an increase of approximately $160 million in its provision for potential loan losses over the first-quarter provision of $135.2 million."
Literally Correct, Yet Confusing
While literally correct, the wording confused a number of newspapers and wire services, which thought the provision was $160 million.
Asked why the company did not simply state that the provision was $295 million, a First Interstate spokesman responded that the release was clear as written. "Everyone understands what we are doing," he said.
Whatever the confusion, the projection of an $80 million loss came through loud and clear to investors: First Interstate's stock fell 17% on the announcement.
