First Interstate Bancorp

Banking

1958-1996

First Interstate Bancorp's headquarters in downtown Los Angeles was the tallest, and arguably most beautiful, office tower west of the Rockies. But in May 1988, fire swept through the structure, killing a security guard and causing millions of dollars in damage.

It hindsight, the event was symbolic of the bank's financial demons.

Some maintain that its turning point as well as that of L.A.'s banking community came two years earlier, in 1986, when it initiated an unsuccessful bid to take over San Francisco-based BankAmerica Corp. The 18-month battle left both banks financially weakened.

At the time, Chairman Joseph Pinola said that without the merger, First Interstate would become a takeover target. And while the bank's financial standing improved over the next few years, analysts still considered it a bloated operation. That made it vulnerable when Wells Fargo & Co. made a successful takeover bid in 1996.

In many ways, First Interstate was a banking pioneer. Founded in 1958 when Transamerica Corp. spun off its banking interests, it was among the first U.S. banks to develop an interstate banking presence. At its peak, it had a sprawling network across 13 Western states and assets of more than $58 billion.

At the time of its demise, First Interstate was the only major bank headquartered in Los Angeles. The loss of more than 7,000 jobs was a tough blow to an economy that had been trying to drag itself out of the worst recession since the 1930s.

"It was a real loss for L.A.," said William Siart, chairman of First Interstate at the time it was taken over. "It was very frustrating for a lot of people who worked there and in the local business community."

Wells Fargo's takeover would not prove easy. The defection of longtime employees and technical difficulties following the merger made it hard for the new owner to maintain the level of service that customers had come to expect.

The merger trouble is seen as one reason San Francisco-based Wells has since been acquired by Minneapolis-based Norwest Corp.

Jason Booth

For reprint and licensing requests for this article, CLICK HERE.