Texas Commerce Sighs: 'Where Have You Gone, Joe DiMaggio?' Streak of Earnings Gains in 65 Consecutive Quarters Ends, but Chairman Love Stays Upbeat and Accepts a Reality

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HOUSTON -- As the three-year-old energy depression has heaped its wrath on Texas banks, the voice of Ben F. Love has been clearly heard above the wailing of energy lenders.

Some banks have reported losses from bad energy loans. Some have cleaned house in their executive offices. Others have failed. But Mr. Love, the chairman of Texas Commerce Bancshares Inc. of Houston, continued to trumpet that his bank holding company had reported 65 consecutive quarters of earnings gains.

At least until the first quarter of 1985.

"My son reminded me the other day that Joe DiMaggio's streak stopped at 56 games. That is the reciprocal of 65," said Mr. Love, drawing an analogy between Texas Commerce's earnings record and the end of the New York Yankee's consecutive-game hitting streak.

"I'm not saying that our earnings gains on a yearly basis will stop," Mr. Love said during a recent interview on the 65th floor of Texas Commerce's downtown Houston tower. "But just in the context that nothing goes on forever, it is possible that the quarter-to-quarter earnings gains that we've had for 19 years will be interrupted."

Texas Commerce confirmed that its quarter-to-quarter record of earnings gains was over March 15. On that day, the bank holding company predicted that its first-quarter net income would be $30 million, down from $44.7 million in the fourth quarter of 1984 and $46 million in the year-ago period.

First-quarter earnings are expected to be depressed because Texas Commerce will increase its loan-loss provision to $46 million and plans to charge off $28 million in bad loans.

Revelations of unexpected loan problems were made more embarrassing when Texas Commerce disclosed in its proxy statement to shareholders that three problem loans were made to company directors. In fact, about $12 million of the first-quarter chargeoffs will be from a $32 million loan to a drilling company controlled by Pat R. Rutherford Jr., an independent Houston energy producer who recently resigned his position as a Texas Commerce director.

"This has to be a psychological blow," said Frank W. Anderson, an analyst at Weber, Hall, Sale & Associates of Dallas. "This has to be pretty tough. They are an image-conscious bank."

Now, bankers and industry analysts wonder if it is time for Mr. Love and Texas Commerce to pay their dues. But even with increasing energy loan problems on the horizon and worries mounting over possible real estate troubles, Mr. Love has no apologies for his bank.

"I think I've already paid my dues because we have been living in the same environment as the others have," Mr. Love said. "You have never heard me chortle or crow about the fact that we have avoided some of the major problems. You never will hear me be so foolish as to do so."

Mr. Love has had plenty to brag about.

During the past 10 years, Texas Commerce has reported a 15% compounded earnings per share growth, the best of the nation's 25 largest banks. For the same period, the company's 1% return on assets and 18% return on equity ranked it No. 1 among the top 25 banks.

For the last three years, Texas Commerce has generated more capital internally than the other big banks. And even with substantial assets in the troubled energy patch, the bank had the fourth-best ratio of nonperforming assets to outstanding loans in 1984.

With such an impressive record, few analysts are ready to write an epitaph for Texas Commerce's above-average performance.

"I think the general perception is they are one of the top banks in the country," Mr. Anderson said. A New York analyst, who asked to remain unidentified, said, "I still think it is a good bank. I still think it is the best-managed bank in Texas."

But measured against its past performance, some recent developments suggest there are trouble spots on the horizon for Texas Commerce. …