P.M. BRIEFING : 1st Interstate Cuts Prime Rate

First Interstate Bank of California today joined the nation’s nine other largest banks in dropping its prime lending rate half a percentage point to 9.5%.

The Los Angeles-based bank, which is the nation’s ninth biggest, was the lone holdout among the top 10 Wednesday when several big banks cut their prime rates by similar amounts. A number of smaller regional banks also followed suit.

Banks delayed cutting the rate even though the Federal Reserve reduced the cost of short-term credit to lenders in December. The unusual delay reflected the sorry state of the lending industry, analysts said.