Customers at O.C. Branches Aren’t Sold Yet
Feelings ranged from ambivalence to outright hostility as customers at half a dozen First Interstate Bank branches in Orange County made it clear Wednesday that takeover winner Wells Fargo is going to have a tough sell here.
Their attitudes are grist for an all-out attack by competing statewide banks and smaller Orange County independents hoping to attract First Interstate customers disgruntled about a move to Wells.
“I have a bunch of friends who have been Wells Fargo customers, and they hated it,” said Kerry Babbitt of Newport Beach as she left a First Interstate branch in Anaheim.
“They said the service is bad and the people just don’t treat customers very well. I could never bank there,” she said, gesturing at a Wells Fargo branch across the street.
Wells says it will fight to retain every First Interstate customer and will expand service by adding to the 350 mini-branches inside supermarkets and other retail stores.
In addition, banking consultants say that Wells, which traditionally has been well regarded as a business bank, has started focusing more on consumers. It is considered an industry leader in using technology to make banking more convenient to customers.
But its rivals smell blood.
Sanwa Bank California issued a statement Wednesday saying that the merger “will be positive for us” because of Sanwa’s “quality of service.” In addition, recent advertising by Glendale Federal Bank, a savings and loan, has played both on consumer weariness of big bank mergers and doubts that bigger is better.
“I have talked with independent bankers up and down the state today, and they are viewing this merger as a significant boon to them,” said Edward E. Schmidt, co-director of the bank consulting firm Findley Group in Anaheim.
Indeed, new community banks may open soon to try to build a solid base quickly from those customers, said Edward J. Carpenter of Carpenter & Co. consulting firm in Irvine.
Carpenter estimated that the majority of First Interstate’s 34 branches in Orange County are so close to Wells Fargo branches that some two dozen offices likely will close.
Past big-bank mergers have spawned a chorus of consumer gripes over branch closings, less personalized service, longer lines and higher fees. Minority communities complain that mergers deprive their neighborhoods of sufficient banking services.
While vowing to enhance services, Wells Fargo also is agreeing to improve its weak presence in poorer and in minority neighborhoods.
The merger will throw as many 8,000 California employees out of work, and a few will likely land at new and existing banks.
“There’s always a demand for experienced bankers,” said Kenneth Slezak, a bank marketing consultant in Irvine. “Smaller banks don’t have the money to spend on training, and they often have older people tired of dealing with regulators.”
But the prospects of working at a small bank didn’t brighten the day inside First Interstate branches.
“I’m extremely upset,” said Irma Osuna, a customer services assistant at Santa Ana’s Main Street branch. “I hope the government has enough money to pay for all the unemployment. It’s unbelievable how many people they are going to lay off.”
First Interstate employees had been hoping that a rival bid by First Bank System in Minneapolis would carry the day because that merger would have saved their jobs and kept the First Interstate name and branch network intact in California.
“With all the large mergers going on for the last year and a half, it was inevitable that it was going to happen here,” said Michael Duran, manager of First Interstate’s branch on Harbor Boulevard in Costa Mesa.
“I think it’s really awful for California,” said Patricia Packer, an investments officer at First Interstate’s office near John Wayne Airport. “We don’t need another 5,000 people unemployed and another industry downsized. With less people employed, there will be less people to buy things.”
Most employees at her branch, she said, are “resigned” to the takeover by Wells.
Customers, Packer said, have not talked much about the merger, though a few have wondered “if they will have to go to the supermarket to get to their bank.”
Virgil Wood figures he won’t be inconvenienced much by the merger. But he said he hates to see First Interstate close because it always has provided him with good service.
“There are Wells offices I’ve been in where there’s a line of customers out the door and 10 employees [taking a break] in the back,” the Anaheim resident complained. “I’ve never run into that with First Interstate.”
Former banker Bill Spencer said he is opposed to the takeover “because it is not good for the consumer; there will be just two giant banks in the whole state.”
The Laguna Hills resident, who retired from First Interstate three years ago, had previously worked at two other banks that were sold to Wells. He said he probably won’t become a Wells Fargo customer: “They don’t have very good service, as far as I’m concerned.”
Other First Interstate customers were more neutral about the move, concerned more about convenience, rates and costs.
“I’ll wait to get the details,” said Patricia Packard of Costa Mesa as she left the First Interstate branch on Harbor Boulevard. “I like a bank close to my home. I used to bank at Wells Fargo, which had a branch close to my house, but they closed it.”
Now Wells has a branch a block away on Harbor, which it acquired in mid-1990 during a Southern California shopping spree that brought a number of community banks in Orange and San Diego counties into its fold.
Daryl Tran of Santa Ana plans to keep his account at Wells Fargo if the merger is approved. He already has a Wells credit card. “I’m not sure what their savings rate will be, but I like a branch close to work,” he said.
Michelle Sargeant of Lake Forest also plans to stay with First Interstate’s buyer, as long as her Newport Beach company keeps her account at the same place. “Otherwise,” she said, “I may look around.”
At least one customer, Bob Applegate of Newport Beach, said he has no concerns about becoming a Wells customer. “We’re in corporate America, and it happens all the time,” he said about the merger.
Being in the marketing industry, he also had noticed the efforts Wells has made to attract consumers.
“Wells Fargo has good spiffs--enticements to customers,” Applegate said. The bank has proven to be a better marketer than First Interstate, he said. “Everything will be OK once the confusion settles down.”
Merger Coverage
* WINNING STRATEGY -- Wells Fargo won the hearts and minds of those who really counted: First Interstate’s big shareholders. D1
* THE LEADER -- The challenges are huge, but experts said Wells leader Paul Hazen will work quickly and successfully. D1
* WHAT’S NEXT? -- BankAmerica and Wells Fargo become state’s only large banks, leaving smaller firms to find fortune in the niches. D5
* ADDITIONAL COVERAGE: D1, D4-6
