Amresco

AMRESCO was the new name given to "Financial Resource Management, Inc." (FRMI), a subsidiary of the NCNB Texas National Bank in 1992.

The subsidiary was created in 1990 after NCNB's name took a beating in the Texas market, after it successfully bidded and acquired the failed banks of Dallas-based "First Republic Bank Corporation" (FRBC) in 1988 from the Federal Deposit Insurance Corporation (FDIC). Prior to the creation of this subsidiary, the activities for which FRMI/AMRESCO was responsible, were conducted in NCNB's name.

Background to NCNB's financial woes

Through a series of political and business machinations, orchestrated by Dallas billionaire, H. Ross Perot, calling upon Hugh McColl, NCNB's chairman who was his old Marine Corps compatriot, North Carolina-based NCNB Corporation became the winning bidder among several competing money-center institutions for the largest banking organization in Texas,

Though the FDIC's action was considered precipitous by many, and its application of policies uneven, arbitrary and capricious — when FDIC later began applying its policies with similar severity to east coast banks, the politicians stepped in to stop them — the general political tide at the time was flowing against financial institutions in the southwest which had become concentrated first in the oil patch, and then in real estate. Even though the U.S. Congress had written laws, encouraging the very lending activities in which these institutions engaged, their failure demanded action. And the politicians did not have the courage to admit that the laws they had passed were the source of the failure. Even U.S. Senator Lloyd Bentsen (D-TX), Chairman of the Senate Finance Committee, whose cousin's son-in-law, John Falb, was a vice-chairman of FRBC, could (or would) do nothing to prevent the FDIC's action.

Part of the agreement between NCNB and the FDIC was that NCNB would not bear any losses from the substandard assets of the failed FRBC banks. This was the typical arrangement when FDIC found a buyer for a failed institution. However, the volume of these assets was so great that FDIC did not have the manpower to take them over in their traditional way. On the other hand, FRBC already had a large corps of employees who had been working these assets with considerable expertise. These now became NCNB employees. In addition, many more employees from the failed institutions would be repositioned to work these sub-par assets and to collect on them for the FDIC. NCNB would earn fees on the collections.

This group was not as efficient as it had been prior to FDIC control, because now there was a government bureaucracy involved. Eventually, the process became an excruciating one, with decisions nearly impossible to procure. And the new bank's name suffered. So, eventually, the "workout group" as this subunit was called, was spun off into a separate subsidiary called FRMI, and later, renamed AMRESCO (for "American Resources Company").

In the meantime, NCNB merged with another east-coast banking organization, C&S/Sovran. This merger was effective in 1992, and realizing the beating, the NCNB name had taken in Texas (which represented roughly half of the old NCNB's holdings), the merged entity would be called NationsBank. NationsBank would eventually acquire Bank of America and adopt this institution's name as its own.

In 1993, AMRESCO was spun off from the company entirely. AMRESCO had also won some "Federal Savings and Loan Insurance Corporation" and "Resolution Trust Corporation" (FSLIC/RTC) contracts to manage the assets of the failed savings and loan institutions. Its big plan, however, was to market itself to client banks — institutions which had not failed — to provide collection services for them.

The FDIC considered this a conflict of interest, however, and as long as the FRBC contract was still a primary source of activity, the client bank's plan was stuck in neutral. The "Resolution Trust Corporation Completion Act" of 1993 (1993 RTC Act) effectively gave FDIC control of all savings institutions as well, and a virtual monopoly on loan workout contracts.

AMRESCO saw a serious decline in employee morale as its future looked grim. The name, "NCNB", became the butt of many jokes, such as "NCNB" standing for "No Cash for No Body", "Nobody Cares, Nobody Bothers", and employees were even beginning to rumble that it meant "No Compensation, No Benefits".

Former bankers whose careers had been built on contentious activities such as collections, bankruptcies and litigation had little skill at such things as marketing for new clients, and frankly, the decimation of the southwestern economy of the late 1980s and early 1990s was finally coming to end.

AMRESCO would have to find some other line of business to stay alive, and it did. The company transitioned into mortgage and commercial loan servicing, although it still lists debtor-in-possession (bankruptcy) financing among its services.