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   [10,121A] In the Matter of BancTexas Houston, National Association, Houston, Texas, Docket No. 90-151kk (10-16-90).

   FDIC issues order conditionally granting approval for waiver of cross-guaranty.

   [.1] Cross-Guaranty—Waiver—Recapitalization—Minimum Requirements

   [.2] Cross-Guaranty—Waiver—Applicable only to Applicant

   [.3] Cross-Guaranty—Waiver—Reasonable Losses

   [.4] Cross-Guaranty—Waiver—Applicable only to Specific Institution

   [.5] Cross-Guaranty—Waiver—Compliance with Federal Reserve Act Restrictions—Required

   [.6] Cross-Guaranty—Waiver—Permanence—Minimum Requirements

   [.7] Cross-Guaranty—Waiver—Revocation for Non-Compliance

In the Matter of
BANCTEXAS HOUSTON, NATIONAL ASSOCIATION
HOUSTON, TEXAS
(Insured Depository Institution)
and
BANCTEXAS MCKINNEY, NATIONAL ASSOCIATION
MCKINNEY, TEXAS
(Insured Depository Institution)
Related to
BANCTEXAS DALLAS, NATIONAL ASSOCIATION
DALLAS, TEXAS
(Commonly Controlled InsuredDepository Institution)
ORDER CONDITIONALLY GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY

FDIC-90-151kk

   BE ADVISED that the Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC"), having fully considered the facts and information relating to the application for an exemption from assessment for losses incurred or reasonably anticipated to be incurred by the FDIC in connection with the default of BancTEXAS Dallas, National Association, Dallas, Texas, filed pursuant to the provisions of section 5(e)(5)(A) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1815(e)(5)(A), by BancTEXAS Group Inc., Dallas, Texas ("Applicant"), relating to its proposal to recapitalize BancTEXAS Houston, National Association, Houston, Texas, and BancTEXAS McKinney, National Association, McKinney, Texas ("Insured Institutions"), has concluded that approval of the application for waiver should be granted, subject to the conditions and restrictions set forth below.

   IT IS THEREFORE ORDERED:

   [.1]1. This ORDER CONDITIONALLY GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY ("ORDER") is conditional upon the recapitalization of the Insured Institutions according to the terms of the proposal as accepted by the FDIC, which includes the following conditions:

       (a) The Applicant shall inject capital of not less than $6,750,000 total into the Insured Institutions within the later of 30 days from the date of this ORDER or one business day after receipt of required regulatory approval.

       (b) Each Insured Institution shall maintain a risk-based capital ratio and an equity capital ratio as required by its primary regulator.

       (c) Neither Insured Institution shall declare or pay any cash dividends during the life of this ORDER.

       (d) All service subsidiaries of the Applicant shall cease to be subsidiaries of the Applicant and shall become subsidiaries of the Insured Institutions, within the later of 45 days from the date of this ORDER or one business day after receipt of required regulatory approval, at no cost to the Insured Institutions, to the extent such activities are permitted by the primary regulator.

       (e) Within 45 days from the date of this ORDER, the Insured Institutions and the Applicant shall adopt a written plan, acceptable to the Regional Director (Supervision) of the Dallas Regional Office of the FDIC ("Regional Director"), which requires and implements a reduction in fees paid by the Insured Institutions or their subsidiaries to the Applicant.

       (f) Within 45 days from the date of this ORDER, the Applicant shall enter into an agreement with the FDIC with respect to the outstanding warrants issued by the Applicant to the FDIC on July 17, 1987, pursuant to an Assistance Agreement dated June 3, 1987. The Applicant shall amend such warrants, which are exercisable for 10% of the Applicant's common stock, so that the exercise price shall equal $0.05 per share of common stock.

         (i) The FDIC agrees that subject warrants shall not be transferable or exercisable before five years from the effective date of this ORDER, except as indicated in subparagraph (f)(ii) below; and

         (ii) The subject warrants shall be transferable or exercisable within five years from the effective date of this ORDER if either or both of the Insured Institutions are transferred or sold or if the Applicant and the FDIC both consent to the transfer or exercise of the warrants within the aforementioned five year period.

       In the event that the Applicant is liquidated or dissolved, the holder of the warrants will receive a share in any distribution as though the warrants had been exercised prior to such liquidation or dissolution; and

       (g) Within 45 days from the date of this ORDER, the Applicant shall enter into an agreement with the FDIC stating that in the event either or both of the Insured Institutions are transferred or sold, the proceeds from said transfer or sale shall be injected into the remaining Insured Institution as capital or be retained by the Applicant in a manner approved by the Regional Director. This Agreement will survive the ORDER and terminate five years after the effective date of this ORDER.

   [.2]2. This ORDER will remain in effect only so long as the Insured Institutions are controlled by the Applicant, and its applicability may not be conveyed or otherwise transferred by the Applicant.

   [.3]3. Contingent upon compliance by the Insured Institutions, the Applicant, or any insured depository institution affiliates controlled by the Applicant with the conditions set forth in this ORDER, this ORDER constitutes a conditional waiver from assessment for losses incurred or reasonably anticipated to be incurred by the FDIC in connection with the default of BancTEXAS Dallas, National Association, Dallas, Texas.

   [.4]4. The conditional waiver granted by this ORDER will apply only to losses resulting from the default of, or FDIC assistance to, BancTEXAS Dallas, National Association, Dallas, Texas, a commonly controlled depository institution of the Insured Institutions. Liability for loss resulting from the default of, or FDIC assistance to, any other insured depository institution controlled by Applicant will remain with all other commonly controlled insured depository institutions, including the Insured Institutions.

   [.5]5. During the life of this ORDER, the Insured Institutions, the Applicant, and all other insured depository institution affiliates controlled by the Applicant shall comply fully with the restrictions of sections 23A and 23B of the Federal Reserve Act, 12 U.S.C. §§ 371c and 371c-1, without regard to section 23A(d)(1) of the Federal Reserve Act, 12 U.S.C. §371c(d)(1).

   [.6]6. If the Applicant shall increase its equity capital account by an outside cash investment of not less than $10,000,000 before January 26, 1992, and such additional capital is downstreamed to the Insured Institutions to the extent necessary to achieve and maintain the capital requirements established by the primary regulator, and contingent upon the compliance by the Insured Institutions, the Applicant, or any insured depository institution affiliates controlled by the Applicant with the conditions set forth in this ORDER, this ORDER will constitute a permanent exemption from assessment for losses incurred or reasonably anticipated to be incurred by the FDIC in connection with the default of BancTEXAS Dallas, National Association, Dallas, Texas.

   7. The Applicant agrees to pursue all regulatory approvals necessary to consummate this ORDER's transactions.

   [.7]8. Failure of the Applicant to recapitalize the Insured Institutions as required herein will render this ORDER null and void. Notwithstanding the foregoing, should the FDIC determine that the Insured Institutions, the Applicant, or any insured depository institution affiliates controlled by the Applicant, fail to comply fully with any other conditions contained herein, the FDIC shall have the right to revoke this conditional waiver, after giving the Applicant written notice of said revocation and a reasonable opportunity to be heard on the matter.

   By direction of the Board of Directors.

   Dated at Washington, D.C., this 16th day of October, 1990.

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Last Updated 6/6/2003 legal@fdic.gov