The Wells Fargo-First Interstate Merger : Q & A : First Interstate Customers Likely to See Several Changes
What will happen to customers of First Interstate and Wells Fargo?
Although representatives at both banks say it’s too early to provide details, the history of previous big-bank mergers hints at less competition, fewer branches overall and higher fees. However, Wells Fargo promises it will offer a wider range of services to both banks’ customers.
“For the moment, it’s business as usual,” First Interstate spokesman Ken Preston said. Nothing will change for several months at least, he said. “It’s going to take time. There’s a lot to be merged there.”
Some First Interstate customers said they are concerned about reduced service. “I hope Wells Fargo remembers who they’re serving,” said Rex Fontenot, who banks at First Interstate. “These days a lot of banks are losing sight of the little guy.”
Here are answers to questions you might have about how the merger, if it goes through, might affect customers:
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Q: I’m a First Interstate customer. Is my branch going to close if the merger goes through?
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A: Probably. Wells Fargo said it would close about 350 of the two banks’ combined 1,386 staffed offices in California, including traditional full-size branches and smaller outlets. But ultimately, Wells Fargo said, the number of branches will increase as it opens more offices in supermarkets.
Wells Fargo has become the leader in starting banking mini-centers in supermarkets across California. The San Francisco-based company now has 312 such offices, which provide access to automated teller machines and several loan services.
Wells Fargo also offers banking services over the World Wide Web on the Internet. So although you may not have a traditional branch office nearby, you are likely to have access to an automated teller, at least several loan services and banking on your computer.
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Q: What about fees? Would I have to pay more?
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A: According to Ken McEldowney, executive director of Consumer Action in San Francisco, existing accounts at First Interstate will be “grandfathered” into the Wells Fargo system. “For the foreseeable future, I would expect that First Instate customers will see no change,” he said. However, Wells Fargo will probably offer incentives to customers to switch their accounts.
New customers, however, McEldowney said, will have to settle for whatever Wells Fargo decrees.
Some analysts and bank officials suggest that competition could increase--and fees and charges drop--as banks and thrifts fight for Wells Fargo and First Interstate customers. Also, the cost savings from the deal could give Wells Fargo room to cut fees, some analysts suggest.
McEldowney said he doubts that would happen, however: “It has not happened in any merger so far. Despite the cutbacks of branches and increased computerization, we have seen banking service fees continue to climb.”
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Q: What about in this case? How do Wells Fargo’s checking accounts compare to First Interstate’s?
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A: Wells Fargo’s least expensive checking program is called Custom Access. There are no fees, but you have to have your paychecks directly deposited. You get an unlimited number of checks, unlimited use of ATMs and unlimited use of the company’s automated telephone services.
You may also make three calls per statement period to a customer service representative. But if you go into a branch for anything that you could have done over the phone or through an ATM, you will be charged $5 for that month.
First Interstate offers free checking accounts to customers 55 and older. Everyone else must pay $4.50 for basic checking--which allows unlimited access to tellers and ATMs, but only allows you to write eight checks a month without an extra charge. There is a $1 fee for each check you write over the limit.
Senior citizens who currently have free checking accounts with First Interstate probably won’t lose them, McEldowney said. “In the future, seniors won’t be able to get free accounts from the merged entity unless Wells Fargo changes.”
Both institutions offer less restrictive free-checking programs to those who maintain minimum daily balances of $750 or more.
After the merger, First Interstate customers will have to get Wells Fargo checks. “I hope Wells Fargo will offer to switch checks free of charge,” McEldowney said. “I think it’s the least they can do.”
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Q: I have a savings account. How do the savings programs compare?
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A: At either bank, regular savings accounts are free if you maintain a minimum daily balance of at least $300. If your balance drops below that, you pay $7 each quarter--$28 a year--at First Interstate and $3 a month--$36 annually--at Wells Fargo.
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Q: What about credit cards? Would rates and fees change?
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A: That’s also anyone’s guess. Wells Fargo’s standard credit card charges 19.8% annual interest plus an $18 annual fee. First Interstate’s basic card offers a variable rate and charges a $20 annual fee.
Wells Fargo also offers variable-rate cards to those with established credit histories. The interest charge is currently 17.9%, plus an $18 annual fee.
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Q: Would the rates paid for deposits change?
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A: These rates change frequently because of changes in market interest rates. However, big banks tend to be slower to raise deposit interest rates when rates are rising and slower to cut rates on loans when interest rates fall, says Martin Bradshaw, president of Bradshaw Financial Network, a rate research and publishing firm.
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Q: What are my options if fees charged for basic banking services rise? Is there anyplace to go to get lower-cost banking services?
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A: “If a person is looking for the lowest fees and highest rates, they should look first at a credit union,” says consumer advocate Stephen Brobeck. But only about half of all households qualify for credit union membership because of membership restrictions, he notes. But those who do qualify can often obtain banking services at far less cost.
Times staff writer Margaret Ramirez and researcher Jennifer Oldham contributed to this report.
