The courtship began in February when BankAmerica chief executive Richard M. Rosenberg placed the initial phone call to his Security Pacific counterpart, Robert H. Smith, just two months after merger talks between Security Pacific and Wells Fargo had collapsed.
The wooing began in earnest six weeks ago when Rosenberg, calling on the Los Angeles Raiders football team--a B of A customer--at its training camp in Oxnard, took a side trip to Los Angeles to meet with Smith. Clearly, the San Francisco banker said Monday, he had more on his mind than "seeing (former 49er star defensive back) Ronnie Lott in a Raider's uniform."
Once they had agreed that the transaction BankAmerica officials had code-named "Project Sunshine" made strategic sense, the two men turned to organizational issues--who would run what, where the headquarters would be--and then, finally, to price. "That's where the tough bargaining took place," Smith said.
Last week, as the banks closed in on a deal, top credit officers of each institution were secretly dispatched to the Biltmore Hotel in Los Angeles to pore over each others' loan portfolio.
Their historic agreement, inked around midnight Sunday in Los Angeles, will reshape West Coast banking.
"Their market power in the West will truly be mind-boggling," said Donald Moore, a managing director at Morgan Stanley & Co., which advised BankAmerica in the transaction.
Nor will that market power likely be restricted to the West for long. "This is a bank that will have the capital and the clout to buy any bank they want in the East," said Richard E. Thornburgh, a managing director of First Boston, investment bankers for Security Pacific in the transaction.
The deal will also extinguish a proud name in California banking, Security Pacific, whose antecedents date to 1871 and include the first bank ever incorporated in Los Angeles.
"It brings a bit of a touch of sadness," said Smith, but "it is in our interests to set aside the issue of losing the name" and focus on what he said would be the many benefits that the combination will bring.
That BankAmerica would come out on top in a megamerger like this would have been hard to imagine a few years ago. At the time, the company and its Bank of America unit were battling problem loans and other woes and BankAmerica was forced to sell such prized assets as its Charles Schwab & Co. discount brokerage unit and the bank's personal trust business in order to survive and ward off a hostile takeover attempt by Los Angeles-based First Interstate Bancorp.
This is not the first time B of A has managed to avoid disaster only to emerge a stronger institution.
Two years after founding what was then known as Bank of Italy in San Francisco, former wholesale grocer Amadeo Peter Giannini found himself operating out of a tent on a pier after the earthquake and fire of 1906. While other banks remained closed, Giannini, who had managed to rescue $1 million in gold bullion and cash from his tiny institution's vault, made loans to cash-starved San Franciscans eager to rebuild.
The episode helped fuel the growth of a bank that Giannini had created to serve the small borrowers and depositors and burnished its reputation as "The Litte Fellow's Bank."
From such populist beginnings, the bank quickly grew and was instrumental in the development of such California industries as agriculture and entertainment.
It was a young Walt Disney who invited a Bank of America vice president to preview an unfinished version of his first feature-length film, "Snow White and the Seven Dwarfs." Disney, who urgently needed a loan to complete the picture, was disappointed when the banker never cracked a smile during the showing, said Disney archives director Dave Smith.
But while the two men walked across a studio parking lot, the banker "turned around to Walt and told him 'this movie is going to make you a potful of money,' " the archivist said. B of A made the loan.
B of A, which was a pioneer of branch banking and bank credit cards, also built a strong bond between its depositors and lenders.
George Parker, a former Security Pacific executive who now teaches banking at the Graduate School of Business at Stanford University, said he was always surprised at the loyalty among B of A customers he tried to woo.
"They always had stories about how the bank stood by them during lean times," said Parker. "Both of those banks have had a legacy of extraordinary (customer) loyalty."
By 1945, Bank of America had overtaken Chase Manhattan as the nation's largest bank. The bank continued to flourish during the postwar years, feeding off the housing and business boom in California. It also spread its international reach, opening offices in Asia and drumming up business among developing nations.