First Community Bank Sugar Land Texas

First Community Bank Sugar Land Texas was founded in 1985.  The company is on the problem bank list for hazardous commercial real estate lending.  Maybe that is why the Texas ratio is 63%.

This disaster lost $19,000,000 in Q4 2011 alone

This abortion has $28,000,000 in junk loans

Do you have money in this fetus?

They stole $21,000,000 in tax payer money and don’t even pay interest on it

FC Holdings

Date Type Amount Program Description
08/14/2009 Dividend $156,090 CPP Dividends Paid in Aug. 2009
06/26/2009 Purchase $21,042,000 CPP Preferred Stock w/ Exercised Warrants
$21,042,000
Committed
0.1%
of Bank bailout commitment
0.1% >
of total bailout commitment.
Disbursed $21,042,000
Returned $0
Revenue to Gov’t $156,090
Net Outstanding $20,885,910

Assets are $625MM with equity of $71MM.

They have $55MM in problem loans, which could be a problem.

This level of problem loans could significantly eradicate the equity position.

This place is looking pretty bankrupt, if you ask me.

They forgot to put the financial statements on the website or tell you who the CEO.

I think I know why. Net income was ($20MM) in FY10 and ($70MM) in FY09.

Those are big losses even for the lone star state.

Stellar

Return on Equity -26.33 Substantially Below Average
Balance Sheet Liquidity 10.54 Below Normal

INSTITUTION SUMMARY
This bank has been rated below average.
Negative factors that impacted that rating follow:

  • Earnings
  • Asset Quality
  • Liquidity

As noted previously, early warning indicators, possibly requiring specific investigation include:

  • Overhead
  • Nonperforming Assets
  • Commercial Real Estate and Construction Lending

PREDICTIVE INDICATOR
As stated, we have determined a composite Star rating for this bank of 2 starstar, indicative of a below average financial condition.

Six Houston-area banks were identified as failing to make the May 16 dividend payment on their Troubled Asset Relief Program, SNL Financial reported Friday.

The banks included Webster-based FC Holdings Inc.

I guess if I was the CEO, I’d be heading for the border because there is trouble in sugar land.

COMPOSITE SUMMARY
Bankrate believes that, as of December 31, 2011, this bank exhibited a below average condition, characterized by substantially lower than normal overall, sustainable profitability, questionable asset quality, strong capitalization and lower than normal liquidity.

e

Do you kept your hard earned money, here because this place is good at losing it.

Local bank agrees to order
Houston County Courier –  December 2009

By Daphne Hereford
Managing Editor
News@houstoncountycourier.com

CROCKETT – First Community Bank NA recently stipulated to a consent order with its principal regulator, the Office of the Comptroller of the Currency, whereby the bank will take action to further strengthen its capital base and improve operating performance.
Bank officials said upon signing of the order dated Nov. 19, the bank was adequately capitalized.
According to recently appointed CEO, and veteran Texas banker Douglas J. Harker, “Many of the actions that the bank is required to take in the consent order have been underway in earnest over the past several months. Management and the board of directors are working diligently to address issues set forth in the consent order.”
The consent order requires the bank to further strengthen its capital levels, reduce the level of non-performing loans, diversify its loan portfolio, and maintain an adequate amount of liquidity while improving operating performance.
The consent order requires the company to reduce its concentrations of real estate assets and officials said the bank intends to broaden its lending to consumers and small business in its markets.
The Crockett branch is one of 36 First Community Bank branches in Houston, San Antonio, Central Texas and Dallas.
According to Harker, “With the sudden downturn in the Texas economy in 2007 and 2008 and its effect on the local Texas market, the bank has witnesses pressure on its real estate loan portfolio as have other Texas banks. Local residential developers have seen sales of residential properties slow, and commercial properties take much longer to lease up. As a result it has become more difficult for borrowers to meet their obligations.
First Community Bank is an FDIC insured institution and regular FDIC insurance continues to be available up to $250,000 per depositor; this increased insurance threshold ahs been extended to Dec. 31, 2013.
There are also many ways encouraged by the FDIC to expand insurance coverage that businesses and individuals can use.
Harker said that First community participates in the FDIC Transaction Account Guarantee Program that has been extended until June 30, 2010. Unlimited FDIC insurance coverage is available on all personal and business checking deposit accounts that do not earn interest, NOW accounts that earn up to 0.50 percent interest and IOLTA accounts.
Harker summed up the challenges at the bank this way, “We have an attractive franchise in great local communities like Crockett which puts us in an excellent position to take advantage of opportunities in the marketplace as the economy improves. Our intent is to emerge as a stronger, well capitalized and Texas-focused independent community bank.”

JLL Partners cleans house at First Community Bank

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By early August, Nigel Harrison’s vision for his Texas community banking empire was coming into focus.

Construction was under way on a 24,000-square-foot headquarters building for First Community Bank NA. The operating arm of FC Holdings Inc. had grown rapidly with a footprint stretching from Houston to the Dallas-Fort Worth market.

Two months later, Harrison has a different viewpoint following his abrupt removal from the First Community executive suite as part of a surprising housecleaning by the bank’s majority shareholder, New York private equity firm JLL Partners LP.

Eight of 13 members of the bank’s board of directors were asked to step down in late August, and JLL Partners appointed three directors to fill certain vacancies (see box).

Harrison relinquished his titles as president and CEO of FC Holdings to Andy Black, who was hired by Harrison in April as CEO of First Community Bank and continues to retain that title.

Remaining as chairman is Mark Clements, a retired Austin attorney and bank investor who became board co-chairman of First Community along with Harrison only days before JLL Partners made the sweeping changes.

JLL Partners had injected $75 million into FC Holdings at the end of 2007 when the bank paid $32.5 million for First Crockett Bancshares Inc., about 90 miles north of Houston, and First Bank of Canyon Creek in the Dallas suburb of Richardson.

Several calls and e-mails to JLL Partners officials were not returned.

Stunned by the changes, Clements says he and Black are still forging ahead, although the bank’s business model based on aggressive growth has been curtailed.

“That kind of expansion and building out those branches will remain stopped until our revenue stream can catch up,” Clements says. “I know we’re going to be making changes in other areas to reduce our monthly overhead to compensate for all these loan-loss reserves we have to fund.”

Clements does not rule out shuttering or selling a branch or two, or possibly laying off some of the 280 employees spread across 36 offices in the Houston and Dallas-Fort Worth areas.

Says Clements: “This has caught everyone off guard.”

Financial statements filed with the Federal Deposit Insurance Corp. show that FC Holdings was building up red ink on the balance sheet.

After losing $11 million in 2007 and $16 million in 2008 — hardly a surprise given the bank’s acquisition and branch build-outs — the company lost another $13 million through the first six months of 2009.

On top of that, the bank took a $37 million goodwill writedown related to the expansion effort, pushing total losses so far this year to $50 million.

Clements says banking regulators are also paying close attention to FC Holdings as loan-loss reserves push higher along with nonperforming commercial real estate loans — the thorn in the side of many community banks nationwide.

A 73 percent concentration of commercial real estate loans within the First Community portfolio puts the franchise in a similar boat as the bank’s peer group. Bank regulators, however, are clamping down at any whiff of trouble as bank failures continue to mount across the country.

“We’re right in the midrange average (concentration) for banks in Harris County, so it’s not really out of whack,” notes Clements. “But the regulators are treating things differently these days. They have their eyeballs on us.”

Whirlwind weeks

The sweeping changes by JLL Partners come three years after Harrison resurrected the First Community franchise.

He made a significant splash in 2005 when he sold the first incarnation of First Community to Wells Fargo & Co. for $123 million, and immediately began to plough those profits back into building up his newest empire.

Harrison planted roots in the suburbs around Houston and then came back into the city this year after a noncompete clause evaporated. FC Holdings added two more Houston-area branches in 2009, and plans called for opening the headquarters on Interstate 45 near Fuqua in December or January of 2010.

The First Community footprint quickly grew from total assets of $32 million in 2006 to $830 million as of June 30. FC Holdings also accepted $21 million in federal government funding this year through the Troubled Assets Relief Program.

Harrison did not return phone calls, but confirmed the changes in an e-mail note.

Wrote Harrison: “I have formed FCT Capital Partners LLC to pursue investment and consulting opportunities inside and outside of banking created by the current economic slowdown.”

For chairman Clements, the past few weeks have been a whirlwind. He visited every branch around the state to shake hands with each employee to try to shore up morale.

“Nigel is still on the board,” Clements says. “He was my banking mentor and he has every interest in seeing this through to work it all out, so what happened could easily be misinterpreted.”

Dan Bass, managing director with Carson Medlin Co. investment bankers, says the bank’s growth strategy simply ran head-first into the shaky economy.

“It shows how quickly things can change for banks in this environment,” Bass says. “The expense of building all those branches caught up with them. The private equity owners must have decided they weren’t doing enough to contain costs, so they’re going to try to turn the ship around 180 degrees.”

Who’s in, Who’s out
JLL Partners LLC, the majority owner of FC Holdings Inc., the parent company of First Community Bank NA, recently made sweeping changes to the bank and its holding company.Among those affected:• Nigel Harrison, the bank’s founder, was asked to step down as FC Holdings president and CEO. He remains on the board.• Andy Black, the Austin banking executive hired by Harrison in April as CEO of First Community Bank, also assumes the title as CEO of FC Holdings.

• Wade Schuessler, former FC Holdings president, and Lynn Krauss, former executive vice president, are no longer with the company.

• Mark Clements, a retired Austin attorney and bank investor, is now the bank’s sole board chairman.

• Parachuting into the boardroom are Thomas Taylor, JLL managing director; Kevin Hammond, a JLL principal; and Fran Waitr, an outside banking consultant appointed by JLL as interim chairman of the FC Holdings board.

Texas Banks Currently on the Naughty List:

  1. First Community Bank, Sugar Land

Texas Problem Banks

First Community Bank, National AssociationSugar LandTX Consent Order

UNITED STATES OF AMERICA BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
Written Agreement by and among
JLL ASSOCIATES G.P. FCH, L L C. New York, New York
JLL ASSOCIATES FCH, L.P. New York, New York
JLL PARTNERS FUND FCH, LP. New York, New York
JLL/FCH HOLDINGS I, LLC. New York, New York
F C HOLDINGS, INC. Webster, Texas
and
FEDERAL RESERVE BANK OF DALLAS Dallas, Texas
Docket No. 11-041-WA/RB-HC
WHEREAS, JLL Associates G.P. FCH, LLC., New York, New York (“JLL”) is a registered bank holding company that controls JLL Associates FCH, L.P., New York, New York (“JLLA”), a registered bank holding company that controls JLL Partners Fund FCH, L.P., New York, New York (“JLLP”), a registered bank holding company that owns and controls JLL/FCH Holdings I, L.L.C., New York, New York (“JLL/FCH”), a registered bank holding company that owns and controls F C Holdings, Inc., Webster, Texas (“FCH”), a registered bank holding company that owns and controls First Community Bank, N.A., Sugar Land, Texas (“Bank”), a national bank, and one nonbank subsidiary; [Page Break]
Page 2
WHEREAS, it is the common goal of JLL, JLLA, JLLP, JLL/FCH, and FCH (collectively, “JLL Holdings”) and the Federal Reserve Bank of Dallas (the “Reserve Bank”) to maintain the financial soundness of JLL Holdings so that JLL Holdings may serve as a source of strength to the Bank;
WHEREAS, JLL Holdings and the Reserve Bank have mutually agreed to enter into this Written Agreement (the “Agreement”); and
WHEREAS, on June 21, 2011, the managing members of JLL, JLLA, JLLP and JLL/FCH, and the board of directors of FCH, at duly constituted meetings, adopted resolutions authorizing and directing Douglas J. Harker to enter into this Agreement on behalf of JLL Holdings, and consenting to compliance with each and every provision of this Agreement by JLL Holdings and their institution-affiliated parties, as defined in sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).
NOW, THEREFORE, JLL Holdings and the Reserve Bank agree as follows: Source of Strength
1. The managing members of JLL, JLLA, JLLP, and JLL/FCH, and the board of directors of FCH shall take appropriate steps to fully utilize JLL Holdings’ financial and managerial resources, pursuant to Regulation Y of the Board of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. § 225.4 (a)), to ensure that the Bank complies with the Consent Order issued by the Office of the Comptroller of the Currency on November 19, 2009, and any other supervisory action taken by the Bank’s federal regulator. [Page Break]
Page 3
Dividends, Distributions, and Other Payments
2. (a) FCH shall not declare or pay any dividends, and JLL, JLLA, JLLP, and JLL/FCH shall not make any distributions to partners or members without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation (the “Director”) of the Board of Governors.
(b) JLL Holdings shall not, directly or indirectly, take dividends or any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Reserve Bank.
(c) FCH shall not make any payments to JLL, JLLA, JLLP or JLL/FCH without the approval of the Reserve Bank.
(d) All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date or other proposed distribution or payment. All requests shall contain, at a minimum, current and projected information, as applicable, on JLL’s, JLLA’s, JLLP’s, JLL/FCH’s, or FCH’s capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings, and allowance for loan and lease losses; and identification of the sources of funds for the proposed payment or distribution. JLL, JLLA, JLLP, JLL/FCH and FCH, as applicable, must also demonstrate that the requested dividend or distribution, as applicable, is consistent with the Board of Governors’ Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).
Debt and Stock Redemption
3. (a) JLL Holdings and any nonbank subsidiary shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank. [Page Break]
Page 4
All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.
(b) FCH shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank. Capital Plan
4. Within 60 days of this Agreement, JLL Holdings shall submit to the Reserve Bank an acceptable written plan to maintain sufficient capital at JLL Holdings on a consolidated basis. The plan shall, at a minimum, address, consider, and include:
(a) FCH’s and the Bank’s current and future capital requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines for the Bank issued by the Bank’s federal regulator;
(b) the adequacy of the Bank’s capital, taking into account the volume of classified credits, concentrations of credit, allowance for loan and lease losses, current and projected asset growth, and projected retained earnings;
(c) the source and timing of additional funds necessary to fulfill the consolidated organization’s and the Bank’s future capital requirements;
(d) supervisory requests for additional capital at the Bank or the requirements of any supervisory action imposed on the Bank by its federal regulator; and
(e) the requirements of section 225.4(a) of Regulation Y of the Board of Governors that JLL Holdings serve as a source of strength to the Bank. [Page Break]
Page 5
5. JLL Holdings shall notify the Reserve Bank, in writing, no more than 30 days after the end of any quarter in which any of FCH’s capital ratios fall below the approved plan’s minimum ratios. Together with the notification, JLL Holdings shall submit an acceptable written plan that details the steps that JLL Holdings will take to increase FCH’s capital ratios to or above the approved plan’s minimums.
Cash Flow Projections
6. Within 60 days of this Agreement, JLL Holdings shall submit to the Reserve Bank a written statement of JLL Holdings’ planned sources and uses of cash for debt service, operating expenses, and other purposes (“Cash Flow Projection”) for the remainder of 2011. JLL Holdings shall submit to the Reserve Bank a Cash Flow Projection for each calendar year subsequent to 2011 at least one month prior to the beginning of that calendar year. Compliance with Laws and Regulations
7. (a) In appointing any new director for FCH or senior executive officer for JLL Holdings, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, JLL Holdings shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).
(b) JLL Holdings shall comply with the restrictions on indemnification and severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s regulations (12 C.F.R. Part 359). Progress Reports
8. Within 30 days after the end of each calendar quarter following the date of this Agreement, JLL Holdings shall submit to the Reserve Bank written progress reports detailing the [Page Break]
Page 6
form and manner of all actions taken to secure compliance with the provisions of this Agreement and the results thereof, and parent company only balance sheets, income statements, and, as applicable, reports of changes in stockholders’ equity. Approval and Implementation of Plan
9. (a) JLL Holdings shall submit written plans that are acceptable to the Reserve Bank within the applicable time periods set forth in paragraphs 4 and 5 of this Agreement.
(b) Within 10 days of approval by the Reserve Bank, JLL Holdings shall adopt the approved plans. Upon adoption, JLL Holdings shall promptly implement the approved plans, and thereafter fully comply with them.
(c) During the term of this Agreement, the approved plans shall not be amended or rescinded without the prior written approval of the Reserve Bank. Communications
10. All communications regarding this Agreement shall be sent to:
(a) Ms. Earl Anderson Vice President
Federal Reserve Bank of Dallas 2200 N. Pearl Street Dallas, Texas 75201
(b) Mr. Doug Harker President and CEO F C Holdings, Inc.
JLL Associates G.P FCH, L L C. 201 Flint Ridge Drive Suite 201
Webster, Texas 77598 [Page Break]
Page 7
Miscellaneous
11. Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, grant written extensions of time to JLL Holdings to comply with any provision of this Agreement.
12. The provisions of this Agreement shall be binding upon JLL, JLLA, JLLP, JLL/FCH, and FCH and their institution-affiliated parties, in their capacities as such, and their successors and assigns.
13. Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.
14. The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency from taking any other action affecting JLL, JLLA, JLLP, JLL/FCH, FCH, the Bank, the nonbank subsidiary of FCH, or any of their current or former institution-affiliated parties and their successors and assigns. [Page Break]
Page 8
15. Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the 21st day of June, 2011.
JLL ASSOCIATES G.P. FCH, LLC.
Signed by: Douglas Harker
Signed by: JLL ASSOCIATES FCH, L.P. Signed by:Douglas Harker
FEDERAL RESERVE BANK OF DALLAS
Signed by: Earl Anderson Vice President
JLL PARTNERS FUND FCH, LP. Signed by:Douglas Harker
JLL/FCH HOLDINGS I, LLC. Signed by:Douglas Harker
F C HOLDINGS, INC.
Signed by:Douglas Harker

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