RIVALS MAY SAVOR MERGER FALLOUT.

Byline: Dawn Yoshitake and Russ Britt Daily News Staff Writers

Wells Fargo & Co. has roped First Interstate Bancorp but competitors hope for a stampede of disenchanted customers from the merged bank.

That, however, may not happen. A recent Gallup Poll on consumers' attitudes toward bank mergers showed 85 percent of respondents chose to remain with the new institution once a merger was completed.

"When people hear their bank is merging, a lot aren't saying they're going to jump ship," said Gregory Chambers, a research analyst for the Gallup Organization Inc. "But when they do go, their primary reason is poor service."

Indeed, poor service was the leading reason cited by a third of customers who defected following a merger. Twenty percent left for better rates and fees at other banks and another 20 percent departed because of inconvenient locations and branch closures.

Wells Fargo has not worked out the details on any new services or products it will offer once the merger is approved by regulators and shareholders. The deal is expected to close by June.

The San Francisco-based bank recently added free checking - providing customers electronically deposit their paychecks into their accounts.

But competitors are banking that First Interstate customers will lose their loyalty as the merged institution closes 350 full-service branches while relying more on mini-branches in supermarkets and automated teller machines.

First Interstate serves 4.8 million households and with a Wells merger would hold about a 40 percent market share in California.

Glendale Federal Bank quickly ramped up its already aggressive ad campaign against First Interstate, Wells and Bank of America. The Glendale-based savings and loan began airing five merger-related ads Thursday with slogans such as: "The Other Way to Bank."

The company also is erecting billboards that say, "Has Your Interstate Bank Gone Coach?," a reference to Wells Fargo's stagecoach emblem. Glendale Federal is touting itself as the smaller, more personable bank for customers, said its Chairman Stephen Trafton.

Sanwa Bank California also is counting on customer disenchantment with large banks, said company spokesman Keith Karpe.

"We feel there will be customers for us who want a more relationship-oriented bank rather than a transaction-based bank," Karpe said.

Institutions such as Glendale Federal, Sanwa and Great Western Financial Corp. have a small window of opportunity in which to capture stray customers from a merging bank, said Dominick Albano, spokesman for the California Bankers Association. And banks are more aggressive than ever, Albano said.

"What you're seeing is aggressiveness that was unspoken in financial services a few years ago," Albano said.

COMPARING THE COMPETITION

First Interstate Bancorp has 4.8 million households that competitors are hoping to woo away in light of its Wells Fargo & Co. merger announcement. Here's a quick look at some of the basic services offered and their fees and yields.

Wells Fargo

Checking: Free with direct deposit

Savings rate: 2.02 yield

ATM: Free at Wells branches for store purchases, but $2 for non-Wells Fargo banks.

Bank of America

Checking: Free checking with direct deposit

Savings: 2.02 yield

ATM: Free at BofA branches and $1 per month for store purchases, $2 for non-Bank of America Banks

First Interstate

Checking: $4.50 monthly fee

Savings: 2.02 yield

ATM: Free for First Interstate branches and for store purchaes, but $2 for non-First Intestate branches.

Great Western

Checking: $8 monthly fee

Savings: 2.02 yield

ATM: Free at Great Western branches and store purchases, but $2 for non-Great Western branches.

Glendale Federal

Checking: Free with direct deposit.

Savings: 2.17 percent

ATM: Free at Glendale branches and for store purchases, but $1 for non-Glendale banks.

CAPTION(S):

PHOTO[ordinal indicator, masculine]CHART

Photo (Color) Smaller firms plan to run ads targeting First Interstate clients displeased with expected cutbacks in post-merger service. Box (Color) COMPARING THE COMPETITION (See text)