Bid for a California Banking Giant : Three’s a Crowd

Wells Fargo & Co.’s hostile $10.9-billion takeover bid for First Interstate Bancorp caps years of speculation that the banks would need to merge to stay competitive. The two--which along with BankAmerica Corp. compose the Big Three of California banking--have indulged in the merger frenzy consuming the industry since the mid-1980s. A brief look at some key events for the Big Three in the past decade:

* 1986: In a deal joining California’s two oldest major banks, Wells Fargo formally completes its purchase of Crocker National Corp. for $1.07 billion. Then-troubled BankAmerica, which lost nearly $1 billion in 1985, considers and later rejects a $3.4-billion buyout offer from First Interstate.

* 1989: In an analysis titled “First Interstate: Wanted Dead or Alive,” a bank stock specialist calls the Los Angeles-based company a prime acquisition target. He adds that the best fit would be a takeover by Wells Fargo.

* 1990-92: A severe recession hammers the state’s 485 banks, including Wells Fargo and First Interstate, which post losses because of increasing real estate loan problems. BankAmerica, which struggled to overcome a sea of red ink in the 1980s, had slowed its real estate lending, helping it to better weather the recession.

* 1991: The disclosure that BankAmerica and Security Pacific Corp. will merge to form a banking behemoth with $190 billion in assets sparks speculation that First Interstate and Wells Fargo must join forces to remain efficient. A former BankAmerica executive predicts, “This will push Wells and First Interstate right into each other’s arms.”

* 1992: BankAmerica announces plans to close 450 offices as a result of its merger with Security Pacific.

* 1993: First Interstate goes on a buying binge and acquires a number of California banks, including the parent company of San Diego Trust & Savings Bank, five HomeFed branches in Fresno, the 12-branch California Republic Bank in Bakersfield and the five-branch First State Bank of the Oaks in Thousand Oaks.

* 1993-95: BankAmerica says it will lay off between 3,000 and 3,750 workers worldwide by the end of 1994. Due to continuing consolidation and cost cutting, total California banking employment hits 220,900 in September, 1995, down from 274,200 in 1990. First Interstate rebuffs a friendly merger offer from Wells Fargo.

* Oct. 18, 1995: In what could be the biggest banking merger in U.S. history, Wells Fargo bids $10.9 for First Interstate.

Sources: Times and wire reports

Researched by JENNIFER OLDHAM / Los Angeles Times

Cashing In?

Banking employment has dropped in both California and Los Angeles County since 1988. Total number of employees, in thousands:

California: 220.9

Los Angeles County: 74.4

Source: California Employment Development Dept.

Sources: Times and wire reports

Researched by JENNIFER OLDHAM / Los Angeles Times