Bid for a California Banking Giant : New Stagecoach Route : Survival of the Fittest

Wells Fargo has launched a $10.9-billion hostile takeover bid for First Interstate Bancorp., which would create the nation’s seventh-largest banking firm. The combined bank would have $106 billion in assets and nearly 2,000 offices in 13 western states. A look at the two banks’ strengths and weaknesses:

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WELLS FARGO

Strengths:

* Efficient. Known for its ability to squeeze costs out of the companies it acquires.

* Lean and mean at 19,400 employees.

* Use of technology. Wells is highly computerized. It was the first major bank to set up a World Wide Web site on the Internet.

* Innovative. Has pushed the concept of branches in supermarkets farther than any other banking firm, with 312 supermarket outlets.

* Warren Buffett. The billionaire investor owns 13.3% of Wells’ shares.

Weaknesses:

* Too local. Big is considered better in banking these days, and all of its 861 banking outlets are in California.

* Interstate inexperience. Wells has prospered in California but is a novice when it comes to running a multistate branch network.

Earnings (in millions): 1994 -- $841

Stock Price

Weekly closes, except latest:

Wednesday: $229, up $15.375

FIRST INTERSTATE

Strengths:

* Geographic diversity. Has 1,133 offices in 13 western states, providing the bank with a strong deposit base.

* Overcame loan problems of the early 1990s by improving its credit process and changing to a more retail and consumer focus.

* Improved earnings in 1995 due to robust loan growth and improved net interest margins.

* Responds well to emergencies, as demonstrated by its quick recovery from a potentially disastrous fire in 1988.

Weaknesses:

* Big staff. Despite recent restructuring, which involved layoffs and aggressive cost cutting, remains heavily stafffed at 27,901 employees.

* Faces risks because of loans to consumers and still-struggling industries in Southern California.

Earnings (in millions): 1994 -- $734

Stock Price

Weekly closes, except latest:

Wednesday: $140.25, up $34.25

Sources: Bloomberg Business News, TradeLine. Researched by JENNIFER OLDHAM / Los Angeles Times