WORKERS, CITY EXPECT BANK LAYOFFS.

Byline: Russ Britt Daily News Staff Writer

Nervous tellers at a First Interstate Bancorp branch in Woodland Hills wore black, anticipating layoffs after a buyout agreement with Wells Fargo & Co.

The Los Angeles City Council, frantic over the impending loss of thousands of area jobs and a key banking institution, called for the chief executives of Wells Fargo and First Interstate to meet with local officials on the merger's effects.

Steve Segura, a Pacoima resident who just recently closed a Wells account and is banking with First Interstate, wondered whether the combined institution will become too large. Segura is looking for a bank that is more personal and doesn't charge for every call or each transaction he makes.

"It's like I can't even ask them to sneeze," Segura said. "I wish there was really a bank for the average guy."

Such was the fallout from Wednesday's announcement that First Interstate had agreed to be purchased by Wells Fargo for $11.6 billion, ending a contentious battle between California's second and third largest financial institutions.

Resisting Wells' initial overtures late last year, First Interstate tried to merge with First Bank Systems of Minneapolis to no avail. First Bank's stock offer had slipped $1.6 billion below the Wells bid.

The Wells-First Interstate merger is the corporate marriage that just about everyone but shareholders didn't want. From employees worried about their jobs to customers concerned over another behemoth bank forming within the state, to public officials fretting over large job losses, all hoped that First Bank's offer would hold up.

Now all are wondering what the banking, employment and economic landscape will be like now that the state will have two large banks - Bank of America and Wells - and a slew of smaller competitors.

The most dramatic impact will be on First Interstate employees. Fearing they will be first on the chopping block by Wells' management as it cuts up to 10,000 jobs, many wondered whether their branches would close and if they could, somehow, be transferred elsewhere.

"I think it's obvious there's a lot of overlapping with the two companies, and there are going to be layoffs," said Mike Grashaw, a data processing worker at First Interstate's downtown Los Angeles offices. "It's pretty scary."

Grashaw, a Northridge resident, said he heard about the possible takeover earlier in the week and was braced for it once the announcement was made Wednesday. Married and the father of three children, Grashaw said he is unable to move if his operations are transferred to San Francisco.

The heaviest job losses, however, are expected to be among branch employees. Wells plans to close 350 of the combined company's 1,289 California branches.

Tellers at a Woodland Hills branch wore black on Tuesday as word of the merger agreement circulated. But they and other tellers said they were instructed by corporate officials not to comment on the possible job losses.

While workers worried about their jobs, customers pondered whether they would remain with the bank. Mark Landis, a Palmdale resident and First Interstate customer, said for convenience sake, he is likely to transfer his nine accounts to Bank of America but dreads all the paperwork he will have to complete.

"I'll either have to drive a little bit further or change banks. I'll probably change banks," Landis said. "It's more of an inconvenience than anything else."

Los Angeles city officials, meanwhile, invited Wells Fargo and First Interstate executives to come to a City Council meeting to explain the expected impact of the merger. Wells officials were not sure whether they would be able to appear.

Councilman Hal Bernson said the city should use its leverage in trying to force the executives to appear before the council.

"We are a major depositor," Bernson said. "I think if they're considering closing branches, we should look at what influence we have."

But economists said while the job cuts will hurt, Los Angeles is better equipped to absorb the blow than in recent years. Jack Kyser, economist for the Economic Development Corp. of Los Angeles County, said there still is likely to be 2 percent job growth in the region this year despite the layoffs.

"The economy would have grown a lot faster if we didn't have this event," Kyser said. "If this was going to happen, it's a good time for it to happen."

Kyser said, however, that it could further increase the glut of vacant office space in downtown Los Angeles, which already stands at more than 23 percent. Los Angeles also will lose prestige by not having a major financial institution headquartered here, particularly one whose name sits atop the two tallest skyscrapers in the city.

WHAT TO EXPECT

First Interstate Bancorp customers can expect to see changes by the latter part of 1996 if the deal with Wells Fargo & Co. is approved.

Wells and First Interstate will close a combined 350 branches in its 13-state territory. Locations have not been decided.

Checking and savings deposits will be transferred after the deal closes, but no firm time frame has been set. New checks will be issued with the Wells name and customers will be notified that their old checks are no longer cashable.

Certificates of deposit will remain in place, since they are contractual agreements. Customers will be able to either roll them into a Wells CD or cash out once the certificates mature.

Commercial loans and revolving lines of credit, like credit cards, have clauses in the agreements that provide for a change in terms if there is a new owner.

Consumer loans, such as for cars and boats, will remain intact until the loan is paid.

Mortgages are written by outside companies for both Wells and First Interstate. It is not yet known how the loans will be handled.

SOURCE: Wells Fargo, First Interstate

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Box WHAT TO EXPECT (See text) Photo (Color) Steve Segura, a First Interstate customer, is worried the merger will mean higher fees. Hans Gutknecht/Daily News