MIDLAND, Texas -- First National Bank of Midland, worth an estimated $1.2 billion dollars, was declared bankrupt late Friday and its assets were purchased by RepublicBank of Dallas.
Officials said the failed institution was the largest independent bank in Texas.
FNB is the third bank in the oil-rich Permian Basin to be closed this year. Delinquent energy loans resulting from a fall in oil prices in 1982 were blamed for the failures.
'First National was declared insolvent and closed today (Friday) by Acting Comptroller of the Currency, H. Joe Selby, due to the bank's inability to meet depositor demand,' said Allan Whitney, spokesman for the Federal Deposit Insurance Corp.
'The bank had experienced severe operating losses over the past 16 months,' he said, 'attributable to substantial losses in energy related loans.
'Widespread publicity of the bank's losses,' he said, 'eroded public confidence in the bank. Its depositors and funding sources withdrew, and First National became unable to locate liquidity to meet its obligations as they matured.'
Whitney said the FDIC guarantees the takeover and will advance the new corporation, RepublicBank First National of Midland, $302 million in casO. It will also assume First National's debt of $664 million to the Federal Reserve Bank of Dallas.
In addition, he said, the FDIC will retain assets of the failed bank with a book value of about $1.2 billion.
He said the Dallas bank was selected following intensive competitive bidding similar to that used to find a takeover candidate for the Knoxville, Tenn., bank of Jake Butcher.
'This is only the second time I know of where this bidding process was used,' he said. A shareholders meeting was cancelled Thursday because the bank had been stabilized temporarily by a $100 million loan from the FDIC.
The loan was announced Wednesday.
First National had equity of $122 million in December 1982, but it dwindled to $7 million on June 30 and $862,000 on Aug. 31, a shareholders' statement said.
The statement to shareholders said the bank had exceeded its loan limits, loaned money to executive officers on favorable terms and failed to comply with securities laws and record keeping requirements.
The other failed banks were identified as Metro Bank of Midland and the National Bank of Odessa, both of which have reopened under other names.
