First Interstate's forecast drives up price. (First Interstate Bancorp)

First Interstate's Forecast Drives Up Price

Though First Interstate Bancorp lost more than expected in the fourth quarter, its optimistic - and unusually precise - projections of future earnings and a drop in nonperforming loans sent the bank's stock soaring.

The price rose as much as $4 to $34.50 in the period following Wednesday's release of financial results.

The stock closed at $33.875 Thursday.

"This management has done a decent job in turning this company around," said Arthur Soter, head of research at Morgan Stanley & Co. Mr. Soter rates the stock a "buy."

Merger Prospect

Mr. Soter feels First Interstate is …