Top Wells Fargo Executive Defects to Security Pacific

In a step highlighting the competition among California banks, Security Pacific National Bank on Tuesday hired the head of the branch system at Wells Fargo Bank as the new chief of its consumer banking operation.

Jerry A. Grundhofer, 43, was named vice chairman at Security Pacific with responsibility for retail banking in California. Retail banking is basically consumer banking, including branches, credit cards and loans to individuals and small businesses.

On Tuesday morning, Grundhofer was in his new office at Security Pacific headquarters in Los Angeles, less than 24 hours after tendering his resignation at San Francisco-based Wells Fargo.

He joined Wells Fargo’s retail division in 1983 and, when he left abruptly Monday, he was executive vice president in charge of the bank’s 443 branch offices in California.

In recent months, Wells Fargo has emerged as perhaps the leading innovator in consumer banking in California. It also has emerged as something of a training ground for rival institutions.

“I guess we had a lot of admiration for what was going on at Wells,” a Security Pacific executive said.

While the suddenness of Grundhofer’s departure was unusual at such a high level, Wells Fargo has sustained several similar losses in recent months.

“It usually doesn’t happen quite that fast, but Wells has been the subject of a fair amount of raiding recently, primarily by Bank of America,” said Dan B. Williams, an analyst at the San Francisco securities firm of Sutro & Co.

In the past 18 months, Bank of America has hired several key executives from its neighbor and rival in San Francisco, most notably Frank N. Newman, who went from chief financial officer at Wells to the same post at B of A.

William F. Zuendt, vice chairman in charge of retail banking at Wells Fargo and Grundhofer’s boss until Monday, complained to a reporter a few months ago that Security Pacific and its new president, Robert H. Smith, were mimicking his best ideas in consumer banking.

On Tuesday, it was Smith who announced the hiring of Grundhofer, praising his strategic and leadership qualities. A spokeswoman said Zuendt had no comment to make on the defection.

Security Pacific, which has 602 branches in California, is the state’s second-largest bank behind Bank of America. Wells Fargo ranks third. Security Pacific has been viewed as generally well managed, and most of its senior executives have come from within the bank.

“I guess they felt that they just didn’t have the right person for this job,” Williams said.

Consumer banking has become more important recently as California banks compete with each other for customers and attempt to solidify their bases in preparation for full interstate banking in 1991. The onset of full interstate banking will mean that banks from outside the West will begin retail operations here for the first time and attempt to cut into the customer base of local institutions.

Grundhofer said in an interview that he has no plans for immediate changes at Security Pacific.

“I’ve only been on the job about four hours,” he said shortly after noon. “It was a very hard decision to leave Wells Fargo, but this is a terrific challenge and a great opportunity.”

Grundhofer, who lives in Los Angeles, began his career in banking at Union Bank in 1968 and rose to regional vice president by the time he left the company in 1981. He was president of Alliance Bank, a small independent, until he went to Wells Fargo in 1983.

In addition to becoming one of three vice chairmen of the bank, Grundhofer will serve on the management committee of the holding company, Security Pacific Corp.