WriteNow@!@@ @0@`x@3@T`?4@sإ~ݗ AAHHdRdd@YY@YY>HHH@  >HHH@   @0@>@@X>@x@@$HH@؊ؔR(,, `Pd '?$ @DHLPTX\T@8X0إ~إ~ݗ$4 إ~HHH@0إ~$4 إ~HHH@0إ~$4 إ~HHH@0@إ~$4 إ~HHH@PP$ PP$ 0إ~݈H$4 إ~ Table Style4Genevawz YOUR SEARCH REQUEST IS: BRIAN LEWIS AND CONNALLY OR TEXAS PAGE 4 38TH STORY of Level 2 printed in FULL format. Copyright 1985 American Banker, Inc. The American Banker April 5, 1985, Friday SECTION: Pg. 2 LENGTH: 885 words HEADLINE: Inside Deals; First City Bancorp. Reveals Troubled Loans to Firms Connected with Three Directors, Including John Connally BYLINE: Special to the American Banker DATELINE: DALLAS BODY: First City Bancorporation of Texas Inc., Houston, has revealed its troubled loans to some of its most prominent directors and their private companies, including a $4 million credit that was guaranteed by former Texas Gov. John Connallycq. :}R The loan guaranteed by Mr. Connally, who has been a First City director for about four years, was originally made to Brian Lewis, currently an Austin, Tex., real estate developer. Mr. Lewis also worked on Mr. Connally's unsuccessful 1980 presidential campaign. First City spokesman Jim Day said all the directors' loans were made by the company's flagship bank, First City National Bank of Houston. CQ According to First City's proxy statement to shareholders, issued March 28, other troubled loans to companies linked to directors include: <~ * A $23.9 million loan to the Quintana Energy Corp., Houston, which is 25% owned by Corbin Robertson, another director of First City, and members of his immediate family. The bank said Mr. Robertson recently gave up his position as chairman of Quintana, which is associated with the prominent family of the late Hugh Roy Cullen. * A loan to the Paramount Petroleum Corp., Houston, which is 20% owned by a subsidiary of Roy M. Huffington Inc. Mr. Huffington, who controls the company that bears his name, CQ no exact position available is a director of First City and a prominent Houston businessman. Paramount is currently involved in bankruptcy proceedings. No interest or principal payments are presently being made on the loan, according to the First City statement. CZ Real estate officials familiar with Mr. Lewis said the developer previously lived in Houston, where he purchased and renovated old homes, primarily in the Montrose area of the city. The officials have asked to remain unnamed. The loan, described in First City's proxy statement, said the credit was due in February 1984, and at March 15 of this year the outstanding balance was $3.7 million. PAGE 5 The American Banker, April 5, 1985   The bank said payments have been made as collateral has been sold. However, the loan, which is listed as a nonperforming asset by First City, is undercollateralized by approximately $2.2 million. The interest rate on the loan is 12%. Bank officials declined to explain under what circumstances Mr. Connally agreed to guarantee the loan to Mr. Lewis. However, some real estate developers privately expressed surprise that Mr. Lewis was having difficulties meeting his debt obligations to First City. I  Efforts to reach Mr. Lewis at his Austin office were unsuccessful. An official for Mr. Connally's Dallas-based Chapman Energy Inc. said the former governor was traveling and was unavailable for comment. Mr. Connally was governor of Texas between 1962 and 1968. In 1972, he headed the Democrats for Nixon organization. He later switched parties and served as secretary of the Treasury under President Nixon. Real estate sources said Mr. Lewis was developing residential property in Austin, including the conversion of an old church into a condominium. wJ First City's Mr. Day said Mr. Connally will not stand for reelection to the bank company's board at its May 9 annual meeting. However, Mr. Day said that Mr. Connally's decision to leave First City's board had nothing to do with the troubled loan to Mr. Lewis. ''He told us he is withdrawing from a number of boards to give more time to his other business interests,'' Mr. Day said. Mr. Connally was recently elected chairman and chief executive officer of Chapman Energy, and he is involved in a real estate development firm in Austin called the Barnes- Connally Partnership. 'No Special Terms' `jw Mr. Day defended all the loans to directors. ''Loans involving directors and the companies they represent are consistent with banking practices,'' Mr. Day said. ''No special terms were made that were not available to similarly situated customers.'' He said that the interest rates given as part of the terms of the loans were the same as those that would have been available to customers with similar credentials. The Financial Institutions Regulatory and Interest Rate Control Act of 1978 prohibits banks from making loans to officers and directors at favorable rates and terms.  Mr. Day also said that the loans had been examined by federal bank regulators, and ''while they were criticized, they were found to be properly handled and in no instance violated insider rules.'' The First City statement says the Quintana loan was originally made in 1981 to finance the remaining one-half interest in a south Texas oil refinery and to provide working capital for the company's other wholly owned subsidiaries. g  PAGE 6 The American Banker, April 5, 1985 Quintana, originally an umbrella company, was set up by Mr. Cullen, the late oilman, who is a Houston legend for his energy interests. Several Houston buildings are named for him. The loan was restructured in 1984, during which time the maximum outstanding was $48.8 million. Mr. Robertson was reported to be out of town and unavailable for comment. He and members of his family guaranteed 25% of the loan. First City said that it has taken $5 million in losses on the loan, which is currently undergoing further renegotiation. First City said that it expects to recover $9 million from the loan this year, with the remainder to be secured by producing oil and gas properties. 4íq tGeneva+@w@ :@ <@ZC@ @I@w@j`@@g0!@0@!+@0@`x@3@T` 4@smn(nnn@n0n<nإ~ݗ* :)AAHHdRdAAd@YH@YH ###