Magazine article American Banker

First City Terms Special Exam Upbeat News

Magazine article American Banker

First City Terms Special Exam Upbeat News

Article excerpt

DALLAS -- Seeking to quiet speculation that it would report significant problems in its real estate loan Portfolio, First City Bancorporation of Texas, in Houston, said last week that a special examination by regulators did not turn up any unexpected troubles that will affect 1985 earnings.

The bank holding company said the special real estate examination by the Comptroller of the Currency at First City National Bank of Houston, its lead bank, was "highly satisfactory." Bank officials said the additional contribution to the loan-loss reserve required by regulators will be less than 1% of the bank's $1.4 billion real estate-loan portfolio.

first City spokesman Jim Day declined to say what size contribution the bank already had planned to make to its reserve. Such contributions are taken directly from earnings.

"This does not mean we can say real estate will not be a problem for Texas banks, but as far as First City is concerned it is encouraging and positive," said frank W. Anderson, an analyst with Weber, Hall, Sale & Associates Inc. of Dallas. "They thought the results of this exam needed to be told. They thought it was good news for the bank and wanted to put out some good news."

Such an announcement by a bank concerning a regulatory examination is highly unusual. But Mr. Day said First City wanted to end speculation that the examination would result in additional contributions to its loan-loss reserve, which would have hurt 1985 earnings.

"There seemed to be a lot of speculation and rumors that we would be hurt by the special exam, and therefore we felt a responsibility to clear the air and set things straight," he said. …

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