WELLS FARGO WILL SHUT 259 BRANCHES IN STATE.

Byline: Peter Sinton San Francisco Chronicle 

Beware of falling branches.

Wells Fargo & Co. announced this week that it will close 259 California branches this summer, affecting 2,000 jobs. Customers will receive letters in the next two weeks notifying them whether their branch is going to close and where their account will be transferred.

The closure of 172 First Interstate branches and 87 Wells Fargo branches is hardly unexpected following completion of the merger of the two California banks April 1. Wells expects to cut $800 million in annual operating costs, largely by closing redundant branches and back-office operations and cutting staff.

Southern California, where the banks had the most overlap, will bear the brunt of the cuts. In Los Angeles County, First Interstate's home base, 53 branches will be closed and 382 jobs are at stake. In San Diego, 34 branches will close, affecting 302 employees.

The branch closures on top of the recently announced sale of 61 branches to Home Savings of America means that Wells is closing more than a third of its 924 full-service, stand-alone branches. However, it is continuing to expand its in-store banking centers, which are a lower-cost way to deliver financial services. Wells Fargo Senior Vice President Marcia Donner said, ``We've also found traffic is much higher at in-store locations because customers find them much more convenient.''

That may be so, but several customers asked at random about the branch closings seemed less than pleased.

``I'm very disappointed to see less competition,'' said Bill Slivka, a First Interstate customer for the past decade and chief financial officer of Heritage Group, a stock brokerage. ``The larger banks become, the more impersonal they are.''

Slivka's branch at 100 California St. in San Francisco will be consolidated into a Wells branch a block away. ``I had a good relationship with First; they'd call me if I was overdrawn,'' said Slivka. ``I'll give Wells a shot but I'm looking at First Nationwide and West America.''

Accounts at First Interstate's branch in the Merchant Exchange Building at 465 California St., with marble columns and huge murals of majestic clipper ships, also will merge into a Wells branch across the street. ``We were hoping this wouldn't happen,'' said customer Elly Miles, office manager for a law firm upstairs. ``It's such a beautiful building.''

Bank employees have been instructed not to talk to reporters but one First Interstate branch employee, who declined to give her name, looked on the bright side. ``There is a very generous severance package - four weeks for each year of service,'' she said.

Not all 2,000 branch employees will lose their jobs. There are 900 unfilled positions, including about 500 in customer service, that branch employees can apply for. But many more jobs will be lost than added. Wells fired 1,750 employees April 1 and announced plans to cut its work force by 7,200 this year.