First City Bancorporation of Texas unveiled an 11th-hour survival plan Friday that would shrink it by one-third. However, regulatory approvals are far from certain.

The plan, released in conjunction with announcement of an $18.5 million second-quarter loss, calls for Houston-based First City to sell 13 of its banks and plow an estimatcd $210 million of proceeds into its remaining affiliates.

Help Needed from FDIC

In order for the sales to succeed, experts said, the Federal Deposit Insurance Corp. probably would have to issue waivers stating that the agency will not use its legal authority to rescind the transactions if the reorganization plan ultimately fails. In addition, First City is asking the FDIC to forgive roughly $100 million of claims against the banking company.

First City, which has $8.5 billion in assets, said the FDIC "has expressed some concern as to the plan's feasibility." Regulators "could take action that could ... adversely affect the company's ability to continue as a going concern," the company said.

The office of the Comptroller of the Currency also must approve the plan. An spokeswoman for the office said Friday that the agency had received the plan but could not yet comment on it.

What the FDIC and Comptroller's office must decide, a government official said, is whether First City can realize as much from the banks it proposes to sell as the regulators themselves could garner in a later and less hurried auction.

A First City spokesman said J.P. Morgan & Co. and Donaldson, Lufkin & Jenrette Securities Corp. are working to raise $100 million of fresh equity in a private placement.

First City has scheduled a shareholder meeting Dec. 8, and spokesman James Day said the company hopes to consummate the deal immediately upon approval.

The FDIC will gain authority Dec. 19 to seize institutions whose capital is nearly exhausted. First City held $66 million of Tier 1 capital at June 30, a slim 0.8% of total assets.

Burden of Problem Assets

A possible impediment to raising equity, analysts said, is that the majority of First City's $497 million of problem assets apparently would still be on the company's books after completion of the deal.

Offset by only $173 million of loss reserves, the problem assets apparently would comprise a larger proportion of First City's remaining gross loans than the current 9.63%.

Seeking to forestall a possible bankruptcy petition, First City separately is imploring bondholders to accept a payment of interest but not of principal on a $22 million note due in September.

Barbara A. Rehm in Washington contributed to this article.

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