Corpus Christi in Tex. Loses Bid To Keep Bank from Taking Stake

Corpus Christi Bancshares has lost a hard-fought battle to keep another Texas bank from buying a large chunk of its stock.

Laredo-based National Bancshares of Texas got the go-ahead from the Federal Reserve last week to acquire nearly one-quarter of Corpus Christi's stock, a move Corpus Christi is not happy about.

In a year of shareholder disputes at community banks, this appears to be the first in Texas, and it is unusual in that it is between two banks.

Corpus Christi, parent of Citizens State Bank of Corpus Christi, has been fighting tooth and nail to thwart National's bid for 24.9% of its stock, saying the purchase would enable National to join forces with Corpus Christi's main shareholder and force a sale of the $233 million-asset Corpus Christi.

Officials at Corpus Christi could not be reached for comment, but National's chief executive, Marvin E. Melson said his company was interested only in a "passive investment" and had no interest in controlling Corpus Christi.

In a report to the Fed, Corpus Christi said National had acted in concert with brokerage M.E. Allison & Co., San Antonio, the largest shareholder of Corpus Christi, to attempt to force the sale.

M.E. Allison president Al Allison said the flap caught him off guard. The brokerage was not "in cahoots" with National, he said.

"I still don't know if NBT owns any shares of Corpus Christi or intends to buy any shares," Mr. Allison said. "Frankly, we've even sold some of our shares recently."

According to Mr. Allison, his firm owns slightly more than 5% of Corpus Christi's stock. Mr. Allison went on to refute Corpus Christi's charges that his firm has had a longstanding relationship with National Bancshares.

The Fed rejected Corpus Christi's claims that National Bancshares worked in concert with M.E. Allison, noting that "shareholders may have similar interests without being deemed to be making acquisitions" in violation of the Change in Bank Control Act.

National Bancshares has agreed not to try to make Corpus Christi or any of its subsidiaries into units. It also said it would not increase its stake in Corpus Christi beyond 24.9% of the outstanding shares.

In addition, the company agreed not to exert a controlling influence over the management or policies of Corpus Christi or its subsidiaries.

Corpus Christi has also alleged that National Bancshares failed to disclose prior attempts at purchasing Corpus Christi, and that this "lack of candor" justified rejection of the proposal.

The Fed rejected the concerns, stating it had full authority to enforce commitments made by National.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER