First Union Corp. revealed plans Tuesday to eliminate 7,480 jobs at CoreStates Financial Corp., but said that after new hires and attrition, only 1,300 people would be out of work after the companies merge.
The outcome is less dire than some CoreStates insiders and community groups around the company's home base in Philadelphia had feared.
Stressing its commitment to the area and its people, First Union promised to make, over a five-year period, $13 billion of community reinvestment loans and contributions in Pennsylvania, New Jersey, and Delaware. It also said it would make grants and charitable contributions exceeding those of a previously announced $100 million foundation, and spend about $40 million on job training and assistance, on top of $209 million of severance pay.
"We are here to stay and to make a positive impact," said John Georgius, president of Charlotte, N.C.-based First Union. He spoke at a press conference in Philadelphia, where community and housing activists endorsed the package.
He said the job-reduction figure of 7,480-39% of CoreStates' 19,114- would be mitigated by the introduction of 3,075 employees.
The resulting net loss of 4,405 jobs would be further eased by an anticipated 16% attrition among employees of the combined banking company. Therefore, only 1,300 people who want a job there would not get one.
First Union also said it would close 172 of the combined company's 1,013 branches in the Philadelphia region. The bank also expects to sell up to 80 more to meet Justice Department antitrust requirements.
Tuesday's announcement was the first detailed word from First Union about post-merger restructuring consequences.
Brown Brothers, Harriman & Co. analyst Nancy Bush said the numbers suggest that First Union will not hit its target of cutting CoreStates' expenses by 45% in the timetable originally forecast.
"I don't think that is necessarily a bad thing," Mr. Bush said. "I think banks have been too slash-and-burn in the past and alienated customers."
NationsBank Corp. recently said it would take more time than originally forecast to wring out the costs promised from its acquisition of Barnett Banks Inc.
Shareholders are to vote later this week on the First Union-CoreStates deal, which was announced in November and also awaits Federal Reserve Board approval.
First Union executives at the press conference appeared to be trying to make peace with Philadelphia political and civic interests that are wary of the local impact of the merger, which is scheduled to close April 30.
"We understand and appreciate the stewardship role that we play in the social and economic life of the communities we serve," said Mr. Georgius.
First Union officials said the bank would keep its promise to place its regional headquarters in Philadelphia. Earlier, First Union chief executive officer Edward E. Crutchfield had indicated he might move it elsewhere-an idea that was loudly criticized by Philadelphia's mayor, state legislators, and congressional delegation.
Civic groups seemed satisfied by First Union's plans, which include $209 million for severance payments, $9 million to help displaced employees find other jobs, $10 billion of the $13 billion community reinvestment commitment for small-business loans, and continuing CoreStates' tradition of donating $17 million a year to local charities.
"First Union is stepping up to the plate in a way that will greatly contribute to rebuilding neighborhoods," said Steve Culbertson, executive director of the Philadelphia Association of Community Organizations.
"Together with First Union, we can assure that this merger creates the best bank for low-income communities," said Andrew Frishkoff, executive director of the Pennsylvania Low Income Housing Coalition.
Harold Schroeder, analyst at Keefe, Bruyette & Woods Inc., said it was important for First Union to resolve any ill will in Philadelphia and get on with banking's biggest merger.
"It sounds to me like they've calmed down enough of the community so they can proceed with getting this merger on track," he said.
