Southeast's Ebert: |An Empty Feeling'

MIAMI - It was 6:30 p.m. on Thursday last week, and Douglas Ebert was staring across the long boardroom table and out the sunlit window.

Southeast Bank's chief executive had just told three regulatory officials his troubled institution could not repay the $568 million it owed the Federal Reserve.

Mr. Ebert knew it was all over when the regulators briefly excused themselves. As the minutes ticked away, he turned to chief financial officer Paul Hill and remarked: "It sure is an empty feeling, isn't it?"

The regulators returned a moment later to declare Southeast Bank insolvent. Most of the bank's assets were immediately turned over to First Union Corp. of Charlotte N.C.

Mr. Ebert, 45, spent his entire career preparing to run his own show. Fourteen months after joining Southeast Bank, his professional triumph was in ashes.

"It's kind of tough to be thrown out on the seat of your pants with absolutely nothing." Mr. Ebert says. "But that's life in the fast lane."

Mr. Ebert was evicted Monday from his executive suite on the 39th floor of the Southeast Bank tower, after First Union declined to keep him on. Where once he was surrounded with all the trappings of executive power, Mr. Ebert must now make do without even a secretary in a Spartan office nine floors above.

Since the Federal Deposit Insurance Corp. abrogated all Southeast's contracts, Mr. Ebert has lost his $450,000 annual salary and is receiving no severance benefits.

|Chief Executive Material'

But Mr. Ebert says he has no regrets about joining Southeast. He says the experience eliminated any nagging doubts he had about his own abilities.

"This is going to lack humility," he says, "but I think that, especially in the last six or seven months, I have proven to myself and others that I am chief executive material. I always thought I could do it, but was never sure. I think I have shown I can be a leader."

Mr. Ebert spent 22 years at New York-based Manufacturers Hanover Corp., where he gained experience in retail, corporate, and international lending. He was considered a rising star and potential chief-executive material until a corporate reorganization blocked his path to advancement. He quit in May 1990.

During his years at Manufacturers, Mr. Ebert developed a reputation as a disciplined and capable manager who, at times, could be cold and abrupt. Mr. Ebert concedes he is "not the world's warmest, most outgoing guy," but insists he is basically shy.

Workday, but No Job

Mr. Ebert's discipline manifests itself in grinding attention to detail and working long hours. Even now that he's out of a job, he continues to arrive at his office at 7 a.m. - and puts in 10-hour days looking for work. (That's down from the 14 to 18 hours a day he used to put in while running Southeast.) He hopes to land a job as chief executive at another bank, but he has not ruled out other industries.

Ever analytical, Mr. Ebert says he hasn't yet done the "full intellectual post mortem" on his failed attempt to save Southeast Bank. But he admits there are a few things he would do differently.

For starters, Mr. Ebert says he should have devoted more effort earlier on searching for private investors. His initial strategy was to merge with another bank, which he believed could be more quickly accomplished than raising private equity.

Potential Buyers Spooked

"The concern we had over a capital infusion was that it could get dragged out with all the bondholder and shareholder approvals that would be required," Mr. Ebert says.

Early this year, Mr. Ebert held merger discussions with NCNB Corp., Charlotte, and Jacksonville-based Barnett Banks Inc. and First Union. But the three banks were spooked by Southeast's deteriorating credit quality.

At the end of the second quarter, Southeast's nonperforming assets stood a $767 million, or 9.22% of total loans. The bank also was experiencing a drain of deposits. It was eventually forced to borrow from the Fed's discount window, the lender of last resort for troubled banks.

"We were determined to be the only bank to go into the discount window and still survive," Mr. Ebert says.

In June, potential bank acquirers began talking to the FDIC about a government-assisted transaction, whereby Southeast would be closed and most of its assets turned over to the acquiring institution.

Southeast, meanwhile, redoubled its efforts to find a private buyer. Mr. Ebert declines to reveal the names of the investors he negotiated with, although New York-based Odyssey Partners L.P. has publicly acknowledged its participation.

Mr. Ebert says that he was negotiating until the very end with a consortium of investors, including Odyssey, to invest $450 million to 500 million in Southeast and take the bank private. But his hopes began to fade two weeks ago, when the investors wanted assurances that they would have time to examine Southeast's loan portfolio.

Knowing that First Union, Barnett, and Atlanta-based Sun-Trust Banks Inc. had already submitted bids, Mr. Ebert told the investors that time was running out.

The meeting ended inconclusively. A week ago Monday, Mr. Ebert learned that Odyssey had decided not to bid. Although the other investors said they were still interested, Mr. Ebert knew time was running out.

He was right: Three days later the bank was seized.

Political Footballs

Mr. Ebert wishes Southeast had had more time to work out a private deal, but concedes it may not have made any difference. But he also believes regulators have a bias for bank consolidation, which he terms "the 11th Commandment" in Washington.

"We got caught up in a series of political issues well beyond our control," Mr. Ebert says. "When you're dealing with the political footballs of Washington, what happens in Miami doesn't count."

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