1,000 Jobs Expected to Go in First Interstate Revamp : Finance: California and Washington--where bank has expanded aggressively--are likely to take most of the cuts.

First Interstate Bank employees across Southern California are bracing themselves for bad news next week, when the financial services giant is to announce a long-awaited restructuring plan that sources say will include the firing of about 1,000 workers.

Bank officials would not comment about the plans ahead of a Tuesday meeting with industry analysts in New York. However, a First Interstate manager familiar with the plans said about 1,000 of the bank’s 28,000 workers will be laid off.

Another 1,800 employees have already had their applications for an early-retirement program approved, and many of them have already left the company, sources said.

Analysts expect the early-retirement program and other cost-cutting moves to result in a one-time charge of between $150 million and $200 million against earnings.

First Interstate’s holding company, First Interstate Bancorp, announced its intentions in March to restructure its operations and trim staff. The Los Angeles-based bank simultaneously announced plans to raise its dividend and increase a stock-buyback program, in part to fend off a possible takeover by archrival Wells Fargo Bank or another suitor.

“First Interstate is one of the last major banks to make big cuts in its staff,” said Phil Colaco, an analyst for SNL Securities in Charlottesville, Va. “The fact that they’ve taken so long to do it tells me that they’ve put a lot of thought into where the cuts should be made--which means that their profits should go up without a noticeable decline in customer service.”

The majority of the layoffs are expected to come from First Interstate’s operations in California and Washington, the two states where the bank has been on an aggressive acquisition binge. About 9,300 First Interstate workers are in California.

“Some of the banks we’ve picked up (over the past 18 months) have branches that are just a block away from our own branches,” a First Interstate source said Friday. “We’ve closed some of those branches, but we have to close some more--and that means that some jobs are obviously going to be lost.”

Among those who will fall victim to layoffs in the coming months are an undetermined number of employees at Bank of A. Levy, the 112-year-old Ventura County company that First Interstate purchased last month.

Many of A. Levy’s 17 offices in the county are close to First Interstate’s eight branches in the area, and First Interstate has already said the merger will cost some of the smaller bank’s 275 workers their jobs.