TEXAS COMMERCE &lt;TCB> SEES IMPROVEMENT IN 1987

  Texas Commerce Bancshares Inc said that
  relatively stable oil prices and the bank's planned merger with
  Chemical New York Corp &lt;CHL> would help 1987 earnings increase
  from last year's profits of 20 mln dlrs.
      Texas Commerce chairman Ben Love, in an interview with
  Reuters, did not elaborate on how much the bank expected
  earnings to increase.
      "We would anticipate that this year would be an improvement
  over last because we are stronger," Love said, referring to
  Texas Commerce's pending 1.19 billion dlr merger with Chemical.
  The merger, which may be finalized as early as May 1, will
  lower Texas Commerce's cost of funding by an estimated 10 to 15
  basis points, Love said.
      The Texas Commerce-Chemical merger is the only acquisition
  by a major out-of-state bank since Texas lawmakers approved
  interstate banking effective January 1.
      Hard-hit by loan losses in energy and real estate in Texas'
  struggling economy, the only major Texas banks able to report
  profits in 1986 were Texas Commerce and RepublicBank which
  earned 54.0 mln dlrs. Allied Bancshares Inc &lt;ALBN> lost 17.6
  mln dlrs, MCorp &lt;M> lost 82.1 mln dlrs, InterFirst lost 326.5
  mln dlrs and First City Bancorporation &lt;FBT>, which is actively
  seeking a merger or other form of new capital, lost 402.0 mln
  dlrs.
      Love said Texas Commerce had turned the corner on its
  energy loan portfolio problems, but added that the bank's
  nonperforming real estate loans may increase during 1987.
      "I think the tidal wave in energy has passed over us," he
  said. "The fact that the real estate market is still moving
  away suggests there could be some continuing growth of
  nonperforming loans."
      In 1986, about 42 pct of Texas Commerce's net loan losses
  related to real estate lending and 13 pct was due to energy
  loan losses. That compares to 1985 when only 17 pct of the
  bank's losses were in real estate and energy accounted for 43
  pct.
      More than half of Texas Commerce's nonperforming loans,
  which totaled 968 mln dlrs at yearend 1986, up from 840 mln
  dlrs the year before, were in real estate.
      Love said he believed the real estate loan problems for
  Texas Commerce and other major state banks would peak by the
  third or fourth quarter of 1987. Absorption of empty office
  buildings in Houston, which has a current vacancy rate of about
  30 pct, will be a gradual process that could take up to four
  years, he said.
      "I think we may be beginning to stabilize this economy. Oil
  at 18 dlrs a barrel brings much more confidence than 10 dlrs a
  barrel," he said.
      Texas Commerce will retain its name as a separate
  subsidiary of Chemical and plans to aggressively expand its
  holdings throughout Texas, offering additional products to
  build up its consumer banking business, Love said. "We are
  resuming what we did best for years -- an offensive position,"
  he said.
      In January, Texas Commerce acquired a failed bank in
  Montgomery County, adjacent to the Houston metropolitan area,
  and earlier this month opened a new bank in San Antonio. Texas
  Commerce plans to add more banks in San Antonio and in the
  Dallas-Fort Worth area where it currently has only 16 member
  banks, he said.
      One day after the Texas Commerce acquisition was announced
  in December, InterFirst Corp &lt;IFC> and RepublicBank Corp &lt;RPT>,
  both headquartered in Dallas, agreed to merge in a deal valued
  at 570 mln dlrs.
      The combination of former archrivals RepublicBank and
  InterFirst, giving the two banks a virtual lock on the Dallas
  banking market, has not changed Texas Commerce's expansion
  plans for the state's second-largest city, Love said. "We think
  we can try to get a little part of their roost," he said.
      The Chemical partnership will also give Texas Commerce an
  edge in developing new consumer products, he said.
      "We have always been a wholesale bank but we have more than
  one million customers all over the state. Chemical will show us
  how to take advantage of enhancing our consumer products," he
  said, referring to expansion of such existing products as
  credit cards and investment banking.
  

