First Union Corp. is mulling the future of 170 bank branches in the Middle Atlantic states after its recent acquisition of Philadelphia-based CoreStates Financial Corp.
By the end of May the Charlotte, N.C., banking company hopes to have a consolidation plan that would close enough branches to eliminate overlap in its retail network, said First Union spokeswoman Laurel O'Brien.
"We do have situations where there are First Union branches and CoreStates branches almost right across the street from each other," she said. "We're not ready to announce branch consolidations, but that should be coming in a week or two."
Shortly after it agreed to the deal in November, First Union estimated it would close a significant number of CoreStates branches that overlapped with its network in Pennsylvania, New Jersey, and Delaware. But in recent months, company officials have said little about how they would dispose of many of those branches.
Just before completing the CoreStates purchase in late April, First Union negotiated a deal to sell 95 branches and $2.3 billion of deposits to Sovereign Bancorp of Wyomissing, Pa.
And First Union is expected to have to close another 170 former CoreStates branches. Otherwise, it would fall short of its own merger- related cost savings estimate of $723 million.
When First Union agreed to buy the $48 billion-asset CoreStates, it said the combined branch system would total 2,766 before any sales or consolidations. Since then, the company has closed or sold about 100 branches in Virginia, where it acquired Signet Banking Corp.
With the branch sales and expected closings, First Union's total network should comprise about 2,400 sites, officials said.
First Union spokesman George Biechler said that the company is still looking at which branches could best be renovated to handle increased customer traffic and other real estate-related concerns. He said closings would not begin until October or November.
"We will inform employees and customers well in advance of any conversions," he said.
Marguerite Sons, an analyst at Interstate Johnson Lane in Atlanta, said that protests by community groups and the significant amount of negative publicity surrounding the CoreStates acquisition make branch closing decisions more difficult.
"They are trying-throughout the franchise-to exit markets that they don't really think are that profitable," she said. First Union is "under so much pressure from community groups ... they don't want to talk about what they're closing."
The company also is evaluating a plan to pull out of about two million square feet of office space in Pennsylvania, New Jersey, and Delaware. Such a move would empty about half the space First Union now occupies in those states.
"We probably won't need the same amount of space as we needed premerger," said Ms. O'Brien. "We're definitely evaluating the corporate space throughout this marketplace. The purpose is to create greater efficiencies."
As previously announced, the company is also cutting former CoreStates employees. About 7,500 people are losing their jobs, company officials said. While most of these employees have been notified, some pink slips remain to be handed out, said Ms. O'Brien.
But hiring is also taking place. A call center is being opened in Allentown, Pa., that will employ 500. Another call center, in Wilmington, Del., is adding about 400 people.
In addition, First Union is still working to make good on its promise of adding 900 jobs in Philadelphia. New posts are being created in capital markets, capital management, automation, operations, and consumer banking, Ms. O'Brien said.