O.C. Banks Stand to Benefit From Merger : Side effects: Customers and small businesses might shy away from such a giant institution.

Orange County bankers hope to cash in on the nation’s biggest banking merger by gobbling up Bank of America and Security Pacific National Bank customers who consider the new institution to be just too big to service small and mid-size companies.

The smaller independent banks also might benefit by picking up talented bankers pushed out by the merger or unwilling to work for the surviving Bank of America entity, says Gerry Findley, a Brea banking consultant who has helped to build independent banking statewide.

“It creates a bigger elephant to bite on the rear end, and it’ll take a lot longer for that elephant to find out it was bitten,” Findley said.

Indeed, the combination of two giants to form the nation’s second-largest banking company with $190 billion in assets “is going to take a while” to digest before it produces much added competition for the independents, said Clyde H. Gossert, chairman of CommerceBank in Newport Beach.

Even then, many bankers say, they expect to gain, not lose, customers from the fallout of the merger.

Independent banks, mainly those with less than $1 billion in assets, typically compete with the state’s few major banks for corporate customers, such as doctors, lawyers, small retailers and small manufacturers. Because they can offer similar products at similar prices, the small banks concentrate on service to their communities to attract and hold the plethora of small and medium-size companies.

Many executives at small banks believe that the bigger the giant banks become, the more business the smaller banks will get. Or put another way, corporate customers will flee the impersonal and distant big-bank culture for the more personalized service they can get at smaller banks.

Something must be working well for the 35 local independents and more than 400 statewide.

In 1974, according to a Findley study, the state’s major banks held the lion’s share of banking deposits, leaving the independent banks with only 8% of the market. But 15 years later, the independents command 25% of the market, he said.

The merger is “more good news for us,” said Richard Boyle, president of Pioneer Bank in Fullerton. “There’ll be more mass confusion with Security Pacific and Bank of America trying to serve the smaller market. Both of them have always been our biggest contributors of business.”

Gossert believes the economy will have to improve before smaller banks see much movement. “A lot of customers are afraid to make a change during a recession because they figure what they have is better than having no bank to count on,” he said.

The sad news, Boyle said, is that thousands of bank employees will be put out of work and the shrinking banking industry won’t be able to absorb most of them. Most local banks are themselves cutting back or merging with each other, putting even more employees out of work.

A few institutions, like National Bank of Southern California, will be looking for Security Pacific and Bank of America executives to hire. “I see a good opportunity to pick up some well-qualified bankers,” said Mark H. Stuenkel, president of the Santa Ana bank.

The commercial real estate business could also be hurt by the merger, said J.B. Crowell, president of Eldorado Bank in Tustin. In Laguna Hills, as in many places throughout the state, the two giant banks have branches across the street from each other, and the surviving Bank of America is expected to consolidate branches where it can.

“There will be a lot of empty bank buildings,” Crowell predicted.

Perhaps Security Pacific’s largest piece of real estate in the county is a 12-story building with 240,000 square feet of office space on Anton Boulevard near Costa Mesa’s South Coast Plaza.

The bank owns half the building--which bears its name--with a joint venture partner, developer Transpacific Development Co. Since the bank also has a long lease with Transpacific, it seems unlikely that the bank would vacate this building.

The bank’s name is also on a Koll Co. tower on MacArthur Boulevard near John Wayne Airport. But the bank has much less space in this 10-story building: One of its 63 Orange County branches uses 10,000 square feet on the ground floor, and it has another 5,000 square feet of offices on an upper floor.

Consumers won’t be losers in the merger, but they won’t win anything, either, Findley said. They won’t see interest rates on deposits go up, and they won’t see less expensive products and services from the streamlined company.

“The customers will gain nothing,” Findley said.

Times staff writer Michael Flagg contributed to this story.