First Interstate to Offer Early Retirement to 2,650 Workers

First Interstate Bancorp said Tuesday that it will offer early retirement to as many as 2,650 employees, or 10% of its work force, as part of a program to cut costs and improve its financial performance.

Management of the Los Angeles-based bank company, the nation’s 13th-largest, also told analysts in New York that they will ask the firm’s board next month to significantly increase the quarterly dividend from the current 50 cents per share and to expand a previously announced stock buyback program from 1.5 million to up to 8 million shares, or 9.7% of outstanding common shares.

The additional share purchases would begin in late June.

First Interstate shares rose $1.625 in New York Stock Exchange trading Tuesday to close at $74.50. The shares had been down from the previous close most of the trading day, evidently on news that Paine Webber banking analyst Lawrence Cohn had cut his rating of the stock from “attractive” to “neutral.”

Trading was halted late in the day pending the restructuring announcement, and the share price soared when trading resumed just before the close.

In its announcement, the bank also said it will seek to acquire other financial institutions that would afford it a return on equity of 18% to 20% and possible expense savings of up to 50%.

The early-retirement program is one of several steps the bank said it will take to cut its costs in 1995 to 58 cents for every dollar in revenue, from 65.75 cents last year.

Company spokesman James Simon said details of the program will be released within the next two to three weeks but that approximately 10% of First Interstate’s 26,589 employees will be eligible for the buyout. He declined to say whether such a cut would meet company goals or whether layoffs would be necessary.