Ted Strauss and His Bank Join the Holding Pattern

Here in the land of the holding company, the independent banker has a peculiar plight: If successful, he quickly outgrows his own independence. Consider the case of Ted Strauss and his very successful United National Bank.

Four years ago, Strauss obtained a charter for an independent bank to serve down-town Dallas. At the time, First National and Republic (both owned by large holding companies) controlled 80 percent of the downtown bank deposits. No new bank had dared enter the market in ten years; many doubted that an independent bank could compete with the tremendous assets of the holding companies. Strauss was making a bold move, and he played the adventurer’s role to the hilt, touting the opportunity for an independent alternative.

During the last four years, Strauss’ United National has done exceptionally well, growing into a $67-million bank, mostly by serving mid-sized corporate customers. But in the last year. United has been going after corporations so large that the bank was hard-pressed to handle their business, United’s loan limit being just too small for many big-time Texas corporations. “We were like a 16-year-old,” says Strauss, “too old to be a boy and too young to be a man.”

Conditions began changing at the bank. United’s president, J. W. Smith, resigned after a tiff with Strauss, and its executive vice president, Lamar Ealy, left for greener pastures. Strauss was left alone at the top as United reached the practical limits on the speed of its growth as an independent bank. He decided to sell out. Strauss opted to join the holding company movement and recently announced that United National hopes to merge with First City (downtown’s fourth largest bank, formerly Texas Bank). IT the merger is approved, United will become part of First City Bancorpora-tion, a holding company headquartered in Houston.

Among those profiting from the end of independence is a group of 20 investors (headed by LTV chairman Paul Thay-er and Texas Oil & Gas honorary chairman Louis Beecherl), which recently purchased 200,000 shares of newly issued United stock, just before Strauss quietly negotiated the merger. Their new First City stock will produce a nifty 27 percent profit. “They were at the right place at the right time,” Strauss quips. The big winner, though, is Ted Strauss. If the merger is approved, Strauss will vault from the chairmanship of his $67-mil-lion bank to the chairmanship of the newly merged $400-million bank, bumping aside First City’s current chairman, James Denton. And Strauss has reportedly won a very lucrative contract from the holding company. Maybe the plight of the independent banker just isn’t all that sad.

Heard on the Street…

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