In an unexpectedly sudden changing of the guard, Security Pacific Corp.'s two top officers--Richard J. Flamson III and George F. Moody--stepped down Tuesday, passing leadership of the nation's fourth-largest banking company to their heirs apparent, Robert H. Smith and Jerry A. Grundhofer.
"What happened in the boardroom today was the product of planning that has been going on for some time," said Flamson, who has been chairman and chief executive of Security Pacific for more than a decade. "We felt it was the appropriate time to get a new team on the field."
Flamson will continue as chairman of the board, while Moody, who previously served as president and chief operating officer of the holding company, will also remain a director and chairman of the executive committee.
Smith, who is already a member of the board, was named president and chief executive of Security Pacific Corp. Grundhofer will replace Smith as president and chief executive of Security Pacific National Bank, the corporation's primary subsidiary. Grundhofer was also added to the parent company's board.
Security also named John P. Singleton, vice chairman, to the additional position of chief operating officer of Security Pacific Corp., and named Nicholas B. Binkley president and chief operating officer of Security Pacific Financial Services System Inc., a subsidiary with assets of $14 billion that runs the company's commercial finance and leasing operations.
Grundhofer, Singleton, Binkley and vice chairman David R. Lovejoy will join Smith and William F. Ford, chairman of Security's financial services system, as members of the office of the chief executive, which sets bank policy and strategy. Flamson and Moody are ex-officio members.
Although Flamson, 60, had been hinting that he would step down before reaching Security's mandatory retirement age of 65, analysts were still surprised by the swiftness of the move. Nevertheless, several praised the change, calling it "one of the smoothest management transitions in the industry."
"This change is evolutionary," said Thomas Hanley, banking analyst with Salomon Bros. in New York. "Bob Smith has steadily been assuming more and more responsibility. And that's characteristic of this bank. They hire people, train them and groom them. Bob Smith has been very well groomed for this position."
Flamson said it seemed appropriate to make the changes at the beginning of a new year and a new decade. He added that although he has also had some health problems, they were not the pivotal factor in his decision to step down.
Security's management stressed that the executive suite changes would have little effect on the direction or philosophy of the bank.
"It is really a matter of carrying on the plan that has been in place," Smith said. "My biggest challenge will be to maintain the momentum that Dick and George started."
Analysts added that Smith and Flamson are a great deal alike and have worked side by side for the past several years. Smith, in fact, has virtually grown up at the bank, starting his career there as a management trainee in 1961. He's held increasingly important titles at the retail bank, the trust department and merchant bank ever since.
Even before taking the helm of Security Pacific National Bank, Smith played a key role in getting Security into the securities business. He was also led negotiations to buy Rainier Bancorporation of Seattle for $1.1 billion--the bank's biggest buyout.
And he orchestrated a major restructuring that forced hundreds of layoffs and helped reduce Security's cost structure. He also helped recruit his longtime friend, Grundhofer, to head the bank's retail branch operation. Smith also has been an advocate of revamping the branch system to make it more sales and service oriented.
"If Flamson is the architect of what Security has become, then Smith was basically the builder," said Frank DeSantis, banking analyst with Paine Webber & Co.
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