Security Pacific Bank
From Wikipedia, the free encyclopedia
Security Pacific National Bank (SPNB) was a large US bank headquartered in Los Angeles, California. It was acquired by Bank of America in 1992.
[edit] History
On September 1, 1868, Hellman, Temple and Co. opened in the then small town of Los Angeles. The banking firm was the predecessor of Farmers and Merchants Bank (1870), which was the predecessor of Security First National Bank. The bank earned a reputation for aggressive and creative business practices and benefitted from economic and population growth in the Western United States. By the mid-20th century it had an international presence, and was ranked the fifth-largest bank in the United States and third-largest in California in terms of deposits.
In 1971, SPNB Security Pacific National Bank (SPNB) buys 69% of Bank of Canton.
In 1975, Security Pacific Bank constructed a 55-story tower in downtown Los Angeles, now known as Bank of America Plaza.
In 1978, computer consultant Stanley Rifkin learned the electronic codes Security Pacific used to telegraph funds to other banks. On October 25 he stole $10,200,000 from a non-existent account, executing one of the largest bank robberies in history. He used the funds to buy some 115,000 Russian diamonds in Switzerland, which he smuggled back into the United States and attempted to sell, but he was captured. Security Pacific took ownership of the diamonds but received few offers for such a large quantity. Eventually it was forced to sell them on unfavorable terms to a Liechtenstein firm affiliated with the De Beers company.
On May 9, 1980 five men robbed the Security Pacific branch in Norco, California. They were among the most heavily armed bank robbers in history, carrying semi-automatic firearms, handguns, and improvised explosive devices, and succeeded not only in stopping several patrol cars but forcing a San Bernardino police helicopter to give up pursuit.
In 1984 The boards of SPNB and Bank of Canton announce that SPNB wants to acquire the ordinary and preference shares of the Bank of Canton it does not already own. The agreement stipulates that the management of Bank of Canton will remain in place and that Russell Fok will continue as chairman of the board. Furthermore, a company associated with Fok will be entitled, upon completion of the acquisition, to purchase a limited equity position in BoC. SPNB agrees to pay $59.31 per share for the 714,128 common shares (31%) that it does not already own for a total cost of about $42 million.
In 1985 a class action lawsuit against Security Pacific accused it of overcharging some 2,500 trust accounts going back to 1974.
In 1986 SPNB acquired California Pacific National Bank, a small bank that primarily serves Los Angeles's Chinese business community, for US$11.5 million. Earlier, BoC had revealed plans for a major expansion in the United States, concentrating on the growing Asian community in California. SPNB also entered into talks with American Asian Bank. This Chinese ethnic bank operated four branches around San Francisco and four in the Los Angeles area.
In 1988, Security Pacific denied a job to hacker Kevin Mitnick for his failure to disclose prior convictions. Four days later, a false press release was circulated stating that the bank had lost $400 million in the first quarter, hurting the bank's share price. The Federal Bureau of Investigation attempted to use this circumstantial evidence in their case against Mitnick, but no proof of a connection was ever uncovered.
Also in 1988 SPNB completed the acquisition of Bank of Canton and renamed it Security Pacific Asian Bank. SPNB finally acquired American Asian Bank. Individuals associated with the ailing Hong Kong-based Tung Group control the bank. (Earlier American Asian had acquired a portion of the failed American City Bank in 1983 and Toronto Dominion Bank of California in 1984).
The 1980s boom for a time sustained the bank, but its aggressive acquisition strategy, unfavorable financial engineering arrangements, and the 1990 recession and Southern California real estate crash devastated its loan portfolio and balance sheet. Banking regulators, concerned problems at Security Pacific could compound the emerging savings and loan crisis, placed the bank under heightened scrutiny.
In 1992 Security Pacific Bank merged with San Francisco-based BankAmerica (now called Bank of America), a deal that was at the time one of the largest bank mergers in history, and its identity was dissolved. In 1993 Bank of America changes Security Pacific Asian Bank’s name to Bank of America (Asia). In 1994 Arab-Malaysian Bank acquired Security Pacific Asian Bank operations in Malaysia.
In 2000 Robert H. Smith, Security Pacific's last chairman and CEO, published the book Dead Bank Walking which chronicled the merger.
