The stunning triumph of Wells Fargo & Co. this week in snaring First Interstate Bancorp. recalls its biggest previous coup: the 1986 acquisition of Crocker National Corp.
In that $1 billion transaction, Wells Fargo nearly doubled its size while cutting the cost structure of Crocker virtually in half. Many analysts on Wall Street still regard it as the best-managed banking deal ever done.
With its experience and reputation, the San Francisco banking company seems likely to go the same route in amalgamating First Interstate after its $11.5 billion takeover of the Los Angeles bank is completed.
The Crocker deal cemented the investment community's perception of Wells Fargo and its chairman and chief executive officer at the time, Carl E. Reichardt, as perhaps the most cost-conscious in the industry.
But if the Crocker acquisition ranks among the most decisive and effective integrations of two American banks, it surely also stands among the most wrenching.
Wells Fargo completed its acquisition of Crocker on May 30, 1986, and immediately announced that nearly 5,000 positions from the two banks would be eliminated by the end of the following year.
About 1,650 employees got immediate layoff notices. All but 43 had worked at Crocker, which had a staff of 12,000 when the deal was announced in February 1986.
But since Wells Fargo itself had shed 400 jobs through attrition and a hiring freeze in anticipation of closing the deal, the immediate drop in head count at the combined bank totaled about 2,000.
Mr. Reichardt neither minimized nor shrank from the task of what has since come to be called corporate downsizing.
"The economies of scale are obvious," he said then. "The arithmetic is simple. The people part of this is what's complex. We thought it would be fair to be up-front and get on with it."
Ultimately, over 4,000 people were cut from the two banks' combined worker rolls of 26,000. By yearend 1990, Wells' head count was 21,800; to this day, it remains below the level of June 1986.
In the latest deal, Wells under Mr. Reichardt's successor as chairman, Paul Hazen, has again attempted to keep personnel matters as unambiguous as possible.
For instance, the company immediately announced it would adopt First Interstate's more generous employee severance program.
Under those provisions, lower level employees will get four weeks pay per year of service, with a minimum of eight weeks to a maximum of 24 months.
Middle managers will receive a minimum 52 weeks of base pay while senior managers will get up to 24 months. Some members of senior management, of course, may also have "golden parachute" arrangements.
Wells kept most of its own managers in buying Crocker. Only 18 of 72 senior Crocker executives initially got jobs at Wells. Of those, three were executive vice presidents and 15 were senior vice presidents.
Wells had assets of $30 billion when it acquired Crocker, with assets of $19 billion. After buying First Interstate, the San Francisco bank will have assets of $108 billion.
The Wells-Crocker merger also featured a branch consolidation program that was large for its time. Some 120 Crocker branches, 50 in Southern California and 70 in Northern California, were blended into one system within a year.