"Nobody Thought It Would Be Us"

By Richard Woodbury

It was the largest of the 69 U.S. banks that have failed this year. The collapse of Unitedbank-Houston (assets: $218 million) showed once again how shaky some parts of the American financial system are, especially in the depressed oil patch. When officials from the Federal Deposit Insurance Corporation shut down the bank last week, TIME Correspondent Richard Woodbury went along to see how such an operation is carried out. As it happened, the drama had an unexpected denouement. His report:

Reeling from bad loans and famished for new capital, Unitedbank was a prime candidate for closure. Still, when an army of FDIC liquidators marched without warning into the bank's headquarters in a downtown skyscraper, the staff of 100 were traumatized. Secretaries wept as the intruders posted notices on the inlaid-glass walls, changed the door locks and dismantled automatic-teller machines. "We kept hearing the rumors, but nobody thought that this time it would be us," sighed Teller Erica Joiner, 30, who watched as armed guards took up positions in the lobby and federal officials affixed blue seals to cash drawers.

Unitedbank's fall resulted from the go-go style of Chairman Vincent Kickerillo, a local land developer. Taking over in 1968, Kickerillo overcommitted the bank to real estate loans and investments in other banks during the oil boom of the late '70s and early '80s. When the economy soured in 1982, so did Unitedbank. By this year it was losing $1 million a month. For a time Kickerillo, a self-made millionaire who commuted to work in a jet helicopter, covered the losses himself. But after an audit three weeks ago showed Unitedbank to be $7 million in the red, authorities moved to declare it insolvent.

Last Wednesday 150 FDIC liquidators began gathering in Houston. To avoid | detection that could lead to a run on the bank, they slipped into a downtown hotel under the cover identity of "Gulf Coast Tours." At 3:12 the next afternoon, minutes after the end of the banking day, they started streaming into the classy marble headquarters and three downtown branches. After assembling the headquarters employees in a basement lobby, Liquidation Specialist Timothy Putnam told them, "As of now, you're on the payroll of the FDIC. You'll get overtime tonight. Balance your windows. Finish your processing. Dinner is coming in."

With that, federal officials wheeled vans to the doors, unloaded portable computers and typewriters and fanned across the bank's five floors, counting cash in the vault, poring over spread sheets and answering the ringing phones with "FDIC." In the executive suite, Secretary Debbie Bratton watched in disbelief as strangers carted off the Texas banking charter. Fretted New Accounts Representative Norma Villaloboz: "Everyone's in shock. Hopefully, somebody will buy us out."

At week's end a rescuer appeared. The American Bank, a smaller institution two blocks away, agreed to acquire the insured deposits of Unitedbank and buy some of its good loans. As word spread that withdrawals could be made on Monday, worried depositors in the lobby broke into wide grins.

But the acquisition still left FDIC Liquidation Chief Frank Norris with the task of trying to collect on Unitedbank's pile of bad loans, some 55% of its portfolio. Assets also include a foreclosed motel, two 150-ton cranes and the gold-color Mercedes-Benz 500 SEL that Kickerillo drove. The FDIC will have to unload the lavish appointments in the bank's 43rd-story penthouse, where Kickerillo and his wife Mary, the bank's vice chairman, once entertained high- rolling clients. Among the fixtures: ten ostrich-skin chairs, imported crystal and a sauna.