In January, 1981, Union Bank Chief Executive John F. Harrigan summoned his top officers to a meeting at a resort in Palma Valley, north of San Diego.
Harrigan, who had been brought in as Union chairman only six months earlier after a 22-year career with Western Bancorporation (now First Interstate Bancorp), saw a need to stem the drain of talented executives and set his own course for the bank.
In his first months on the job, the new chairman had met considerable internal resistance from managers who had grown up under former Chairman Harry J. Volk and had to move forcefully to put his stamp on the organization.
In the four years following the Palma Valley meeting, Union has posted increasing profits and continued quietly, almost ploddingly, to grow. The bank, which even its own public relations chief describes as "boring," has carved a solid niche as California's sixth-largest bank while avoiding the turmoil that has plagued many of its larger competitors.
The meeting, which Union executives describe as a watershed in the bank's history, marked the end of the 23-year Volk era. Although Volk retired in 1980, his "personality was still coming out of the walls," according to one Union executive.
Under Volk, a charismatic and innovative leader, the bank had shown phenomenal growth, rising from the 84th-largest U.S. bank to the 23rd. But in the late 1970s, it slipped to 30th as growth at other Sun Belt banks outpaced it.
Out of the Palma Valley session came a major corporate shuffle and a commitment to sharpen the already tight focus of Union Bank, known for decades as primarily a business bank catering to the "middle market" of companies worth between $2 million and $125 million.
Union has a broad mix of customers, but it targets mid-size firms in energy, telecommunications and health care.
As part of the bank's new strategy, Harrigan moved to close retail bank branches acquired as part of the 1979 merger with Standard Chartered Bank Ltd. of London, to widen financing of customers' foreign trade, to attract deposits from thrifts and smaller banks and to expand nationwide using Standard Chartered's offices to penetrate lending markets in New York, Chicago and Atlanta.
Union has received little public notice under Harrigan, partly because its stock is privately held and partly because it hasn't suffered the well-publicized reverses of such big competitors as Bank of America, Crocker National Bank and Continental Illinois.
"In these times, boring is beautiful," said bank analyst Don Crowley of the Wall Street investment firm of Keefe, Bruyette & Woods Inc.
"It's one of those banks uniquely positioned where a lot of the larger and better-known banks would like to be, heavily concentrated in the middle market. For the kind of business they're doing, they're ideally structured.
"Their principal challenge is that a lot of other institutions would like to be configured like Union. Their competition is going to go after their client base. They'll have to work hard to defend their turf," he said.
Looks Toward Pacific
"You can't stand still, because if you do, the rest of the race will pass you by," he said in an interview in his understated office on the 10th floor of the Union Bank building in downtown Los Angeles. His windows look westward, toward the Pacific, where he plans to direct much of his effort in coming years.
In December, Union sold 61% of its foreign loan portfolio, totaling $462 million, to its parent Standard Chartered, keeping only $225 million in loans to Asian-Pacific countries. The deal helped Union get out from under $20 million in non-performing loans to Latin nations and to build cash reserves to expand in the United States and around the Pacific Rim.
"We're going to be doing the same things but in more places. We're going after the same kinds of businesses with the same people. That's my vision of the future," Harrigan said.
Harrigan is building on a successful formula established by Volk, who still keeps a close eye on the old shop. Volk, 79, is chairman of the Los Angeles-based Weingart Foundation and a consultant to Union Bank.
"The bank will be a national institution without any doubt," Volk said. "It will be even more specific in directing its market objectives. It never has been a bank for the barber shop or the dry cleaner. That philosophy remains."
During his years at Union, Volk introduced such innovations as daily interest compounding, banking by mail and the single-bank holding company. His entrepreneurial spirit spawned a generation of aggressive, ambitious bankers, many of whom later found success running their own banks.