Robert H. Smith

Security Pacific Corporation already has operations in five western states, and plans to acquire an Idaho-based bank in 1990. Its [...]

June 1 1990 by Sheri Linden


Security Pacific Corporation already has operations in five western states, and plans to acquire an Idaho-based bank in 1990. Its new CEO, Robert H. Smith, is keen on advances under way in interstate banking. “While the West has been open for about a year, at the end of this year there’ll be some 18 other states where we can do banking business-that’s a unique and high-priority opportunity.”

Smith is certainly familiar with California banking: although he took the helm only months ago, he’s been with the state’s second biggest bank for nearly 30 years. In mid January Smith, 54, assumed his new role as leader of the nation’s fifth-largest banking firm.

Smith takes the reins in the midst of changing markets and continued thrift-crisis fallout, but conservative management in the past has helped Security Pacific’s chances. Smith stresses that his goals for Security Pacific remain the same as those he helped to engineer with former CEO Richard J. Flamson. But Flamson was more interested in the capital markets. Topping Smith’s list of priorities is the expansion of retail and business banking. In 1989, the bank acquired 20 percent of Los Angeles-based Mitsui Manufacturers Bank.

Security Pacific’s success, says Smith, comes from giving “our customers what they need, not what we want to provide them. We think of ourselves as more of a drugstore and not a pharmacy.” That philosophy has raised assets to $86 billion, and given a lift to 1990 earnings, up five percent and estimated to top $750 million.

But there’s a problem in sunny California banking. Security Pacific’s stock price remains depressed relative to the bank’s earnings. If Smith is going to take advantage of the opportunity for more takeovers, Security Pacific must raise its stock price.

The answer staring at Smith is troubled banking giant First Interstate Bancorp, his crosstown competitor. A First Interstate takeover would give Security Pacific the critical mass it needs to capture investor recognition.

Smith won’t discuss a potential bid, but has called such a merger “beneficial.” In the meantime, he gets to “sit in the sun once in a while” in La Canada, where he and his wife Loretta live.