PALO ALTO, Calif. - It is no longer wholly independent, but University Bank and Trust is doing its best to retain that image.
Retaining executives, however, is another matter.
The bank, which is being bought by giant Comerica Inc., Detroit, said nine officers have left since the $73 million stock swap was announced last fall.
University is already being run as a Comerica subsidiary, though the purchase has not been completed; it is expected to take place in February.
The Silicon Valley institution, known for such practices as free shoeshines and Walla Walla onion giveaways, says the sale won't have much effect on customers.
"There are people that want to work with and do business with a small bank, and there's always the perception that after something like this the small bank is going to turn into a large, bureaucratic institution," said J. Micheal Fulton, chief executive of Comerica California, which has 27 offices in the northern part of the state.
"We're a different bank now, and there were some unique things to University Bank, but we're trying to keep changes as transparent as possible. It really hasn't created any disruptions."
For many executives at so unusual a bank, however, the change was enough.
"The people that have left did so not because of anything Comerica has done, but because they enjoyed working for a smaller bank," Mr. Fulton said.
"University was headed by a man, Carl Schmitt, who was truly wedded to the concept of independent community banking - until he changed his mind and sold the bank." said John Rossell, the president and CEO of Heritage Bank in San Jose. "His staff was really unhappy with him after that decision."
Heritage is looking to capitalize on any void in the community bank market left by the takeover.
Hall Palmer, who had been University's executive vice president and senior trust officer, joined several former Palo Alto colleagues at Cupertino (Calif.) Bank and Trust earlier this year because he wanted to remain at a community bank.
"I have to confess to a liking for the smaller institutions," said Mr. Palmer, who is Cupertino's executive vice president and senior trust officer. "I think it would be relatively difficult to retain the small bank atmosphere after a deal such as this. The reality is Comerica is a $30- plus-billion operation headquartered in Detroit. There's a limit on the amount of autonomy that can exist in that framework."
Before the takeover, University had a reputation as one of the area's premier community banks. Banking analyst Phil Hage, a vice president of research with Van Kasper & Co. of San Francisco, said University still appears to make the small bank commitment.
"They have continued to carry on the community bank approach that they had before and they've done this in several ways," he said. "They kept their name, they took out advertising very carefully laying out the rationale for what they did, they continued the Walla Walla onion approach, which gives them the flavor of a community bank, and they are still doing things such as sponsoring antique car shows. They seem to be doing it the right way."
But Mr. Rossell said University has its work cut out for it.
"Its just awfully hard to have a far-flung empire and also a community banking atmosphere," he said. "An awful lot of decisions are made in Detroit."
University has $438 million of assets. Under Mr. Schmitt, it maintained good credit quality and strong profitability despite California's economic downturn earlier this decade, and built a name for itself as an alternative to the state's major banks.
Mr. Schmitt remains University's chairman and will take a seat on Comerica California's board, but he plans to retire fairly soon.
Comerica, looking to take advantage of University's solid reputation in one of California's wealthiest areas, departed from its normal procedure by keeping University as a separate division with its own name and management.
Now that University is part of a larger entity, Heritage and others are eager to offer themselves as alternatives.
"We've been the beneficiary of several customers who've just walked across the street and said we want to do business with someone local." Mr. Rossell said. "Customers who don't want to put up with a change of management."
David Hood is another University executive who moved to Cupertino Bank and Trust after the deal. President of the Palo Alto bank for a short while, he made the move in April.
"What we at the smaller banks can offer is quick response time and the close relationships that can be nurtured," said Mr. Hood, Cupertino's executive vice president and senior loan officer. "I think Cupertino is based on a relationship approach, as University was."
Mr. Palmer said he's going to wait before passing judgment on the University merger. "I haven't observed anything significant happening there yet," he said. "The jury is still out on everything. I think the real question is, how will things look a year from now? Time will tell."
Kevin R. Dietrich is a freelance writer based in Brookdale, Calif.
