Bank Pursues Reorganization Options In Wake of Record Losses
DALLAS (AP) _ Top officials of First RepublicBank Corp. are looking at a possible reorganization in the face of record fourth-quarter losses, and may be considering a possible merger with an out-of-state entity, analysts said Friday.
Any merger would come just six months after the state’s largest bank- holding company was formed when Republicbank Corp. acquired Interfirst Corp. in a transaction that preserve the banks’ Texas roots.
″I think they would be very open (to a merger). It’s just a matter of who’s asking,″ said Frank Anderson, an analyst with Eppler Guerin & Turner Inc. of Dallas. ″You could buy a lot of assets for pretty cheap.″
First RepublicBank’s stock dropped about 30 percent, closing at 4 3/8 Friday, as the financial community reacted to the company’s announcement on Wednesday it could lose as much as $350 million in the fourth quarter.
On Friday, the company’s senior debt rating was lowered to B-plus from BB- plus by Standard and Poor’s.
Talk of possible reorganization plans at First RepublicBank, the nation’s 12th-largest bank holding company with $33.6 billion in assets, surfaced in the market, which further unsettled investors, analysts said.
″There is investor concern with regard to exactly what type of reorganization will ultimately be needed,″ said Sandra Flannigan, a bank analyst with PaineWebber Inc. in Houston.
First RepublicBank spokesman Joseph Bowles denied that the company is devising plans that would resemble action taken at two other Texas bank holding companies that received federal bailouts.
At Houston-based First City, the federal bank insurance fund is infusing $1 billion and private investors are being sought to plunk down $500 million in a deal that will rescue the ailing Houston-based concern and allow it to spin off problem assets into a separate entity.
At Dallas-based BancTexas, the federal bank insurance fund infused $150 million and a private concern raised $50 million in new capital.