First Interstate Shareholders Make It Official : L.A.’s Last Major Bank Will Become Part of Wells Fargo on Monday

In their final official meeting Thursday morning, shareholders of First Interstate Bancorp voted Los Angeles’ last major banking company out of existence.

The slightly melancholy 16-minute session at the Sheraton Grande Hotel in downtown Los Angeles lacked any of the drama of the four-month hostile takeover campaign that led to First Interstate’s acquisition by San Francisco-based Wells Fargo & Co.

For the shareholders, sadness at the passing of the 37-year-old firm was balanced by the prospect of a stunning return on their investment--a 60% run-up since Wells made its original offer Oct. 18.

For many of the estimated 8,000 to 10,000 First Interstate and Wells employees who will lose their jobs in the merger, the pain of dislocation will be cushioned by what may be the most generous severance program in U.S. banking history.

Most workers will receive four weeks’ pay per year of service. But for the top 500 executives, separation packages of two times annual pay and bonus are so bountiful that “we’ve had departments where people are afraid we will offer them a job,” joked Patricia R. Callahan, the Wells executive vice president directing the transition. “Trying to recruit Stanford MBAs is not this hard.”

At lower levels, however, particularly among workers whose tenure has been too brief for a fat severance, there is anxiety as they await the merger’s official closing on Monday, the day they will learn whether they have a job.

On Monday, Callahan said, workers will receive letters saying one of three things: You’re out, you’re in or you’re in for now--typically a 60- or 90-day period during which Wells departments will assess their needs.

With as many as 350 of First Interstate’s 415 California branches expected to close, thousands of tellers and other retail bankers will be forced out, although several hundred may land jobs in Wells’ expanding telephone banking operations and a smaller number in its supermarket branches.

Among the First Interstate offices considered most vulnerable to job cuts is the Los Angeles operations center at 7th Street and Garland Avenue, a neighborhood on the fringe of downtown where single-room apartments rent for $395 a month.

Nearly 2,100 people work in the 10-story glass-block complex at credit-card processing and mortgage documentation--”back shop” operations that are among bank’s the lowest-paying. A local employment expert estimated that most wages at the center range from $5.50 to $12 an hour.

Although it has made no statement as to the fate of the 7th and Garland complex, Wells plans to eventually move most of its back shop operations to earthquake-safe areas outside California. A First Interstate operations center in Tempe, Ariz., for example, has been designated as one of the facilities that will survive.

Workers on a cigarette break outside the 7th and Garland building on a sunny afternoon this week said they had been instructed by supervisors not to speak to the media, but several acknowledged being anxious.

“I’ve been here two years, so there won’t be much [severance] for me,” said one woman who holds a clerical post.

At Thursday morning’s shareholders meeting, First Interstate Chairman William E.B. Siart was asked whether Wells offered the same dividend reinvestment program as First Interstate.

“I don’t know,” Siart said. “I don’t own any shares yet.”

He will on Monday. According to the proxy statement for the meeting, Siart holds stock options that will be worth $6.7 million when the merger closes, assuming a final price of $170 a share. Vice Chairman William S. Randall’s options are worth $3.9 million, and the three next highest-ranking officers hold options worth $3 million apiece. All told, the 13 top executives at First Interstate have $33 million worth of stock options.

That’s in addition to the $28 million in severance pay that the top 13 will split, headed by Siart with $5.8 million and Randall with $3.9 million.

Wells Fargo’s shareholders also approved the merger Thursday, at a separate meeting in San Francisco.

First Interstate stock closed at $169.50 on Thursday, down 50 cents in trading on the New York Stock Exchange. Wells Fargo stock closed at $255.375, down $1.625. With each First Interstate share being exchanged for two-thirds of a Wells share, the indicated total value of the deal Thursday is $13 billion.

* BRANCH BUY

Home Savings will buy 61 First Interstate branches. D6