The 
American Banker

                            March 5, 1980, Wednesday

SECTION: Pg. 2

LENGTH: 773 words

HEADLINE: Detroit Bank's Yearend Loss Is Lower Despite Hotel-Related 
Expense

BYLINE: Midwestern Bureau

DATELINE: DETROIT

 BODY:    Bank of the Commonwealth posted a 1979 loss of $269,309.This 
marked an improvement over its year-earlier losses, despite the $1.7 
million net effect of expenses associated with its half ownership of the 
Radisson Cadillac Hotel, acquired in a 1976 foreclosure.

   The Detroit bank has been plagued by problems throughout the last 
decade.  It managed only one profitable year since 1973.  Besides the 
Cadillac Hotel situation, Commonwealth has been struggling with a $13.1 
million loan to Arlen Realty and Development Corp., a real estate 
developer that has suffered significant losses in recent years.

   In the latest year there was no impact on the bank's performance from 
the Arlen Realty loan, which was placed on nonaccrual status in April, 
1978.  In December of that year Commonwealth accepted the real estate 
company's proposal for restructuring the debt, reducing the loan to 
$11,070,000, and charging $1.4 million against its allowance for losses 
on loans.  Due in part to the Arlen Realty losses, Commonwealth had a 
1978 operating loss of $2.9 million.

   Chairman Matthew Steckel says he is pleased with the bank's 1979 
performance, despite the loss for the year.  "The resolution of two major 
problem areas which have been with us for more than a decade made 1979 
something of a milestone for us," he said.  He added that the bank does 
not anticipate that either the Cadillac Hotel or Arlen Realty will have a 
negative influence on future operations. Arlen Losses

   Commonwealth sold its share in the Cadillac Hotel to Detroit Economic 
Growth Fund, Inc., on Feb. 13, but the entire effect of the expenses was 
realized during 1979.

   The Arlen loan is presently secured by mortgages on various shopping 
centers. Settlement is scheduled for Dec. 31, 1990.  No interest will be 
charged until Jan. 31, 1984, after which interest will increase in 
scheduled increments from 2% to 5 1/2% in 1990.  Quarterly payments, 
including interest, will range from $70,000 to $250,000.  A $7 million 
balance will remain on Dec. 31, 1990.

   The losses before securities transactions of $285,962 or six cents in 
1979, and $511,402 or 11 cents a share in the fourth quarter, represent 
an improvement over the 1978 results.  During 1978 Commonwealth recorded 
an operating loss of

                                                                       
PAGE    4                        The American Banker, March 5, 1980                       


$2.9 million or 66 cents a share for the year, and $3.5 million or 78 
cents a share for the fourth quarter.

   Net interest income declined to $36.6 million in 1979 from $37 million 
in 1978.

   The Commonwealth chairman found this encouraging.  The slight decline 
in net interest revenue, Mr. Steckel says, occured "even though there has 
been a considerable increase in our cost of deposits and other 
liabilities."

   Another positive factor during 1979 was reduction in the provision for 
loan loss to $3 million from $5.8 million in 1978.  The total reserve for 
possible loan losses increased marginally to $8,450,000 at the end of 
1979 from $8,320,000 a year earlier.

   The total reserve was 1.09% of loans outstanding at the end of last 
year, compared to 1.14% at the end of 1978.  Charge-offs against the 
reserve declined in 1979 to $6.1 million from $10.3 million in 1978. 
Deposit Decline

   Year-end deposits at Commonwealth declined 1.4% to $868.2 million from 
$880.4 million a year earlier.  The decline, Mr. Steckel says, was due to 
the bank's decision to de-emphasize interest-sensitive deposits, 
primarily negotiable certificates of deposit.

   Assets also declined during the year.  At the end of 1979, total 
resources stood at $1.084 billion, down from $1.125 billion at the end of 
1978.

   Severe earnings problems at Commonwealth forced the Federal Deposit 
Insurance Corporation to provide $35.5 million in capital notes to the 
bank in 1972. Under terms of the FDIC refinancing, the agency retains 
extensive control of the bank's activities.  The notes are payable by 
1987; the first payment due in 1981.

   In 1975, Saudi Arabian businessman Gaith R. Pharaon purchased a 
controlling interest in the bank.  Mr. Pharaon sold his interest the next 
year to First Arabian Corp., a group of Middle Eastern investors.  FAC 
recapitalized the bank with an infusion of $20 million.

   Mr. Pharaon went on to acquire more than 90% of the stock of  Main 
Bank of  Houston  in cooperation with a group of investors including John 
B. Connolly, the former Texas Governor and Treasury Secretary.  The Saudi 
businessman is now in the process of acquiring the National Bank of 
Georgia.  He has been increasing his stake in the Atlanta bank since his 
purchase two years ago of 10% of the outstanding common held by former 
Director of the Office of Management and Budget T. Bert Lance.



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