Autobiography - The Galindo Group

Ram Galindo THE MAKING OF AN AMERICAN Page 133
1992, before I finished paying these obligations. Payment of the guaranty on the loan to
the Houston developer would not be complete until October 16, 1992.
For some time before the advent of BVB, as we pleasantly watched Western outperform
its competitors, we had been turning our attention to other banks in central Texas. We
wanted to acquire another bank or banks that could meet our needs. Our goal was to
form a bigger and stronger banking institution that could handle larger loans, and thus
become a significant force in the development of our area. We were looking for a good
fit to accomplish this and also benefit all stakeholders involved. With the added personal
liquidity that ensued in mid-1985 by the assumption of part of our debt by BVB, we were
now in a position to effectively pursue some of these opportunities. A bank with
significantly more deposits than loans fitted our purpose. This scenario existed in some
of the rural communities surrounding Bryan-College Station, but was especially true in
the areas where farmers had become suddenly rich with royalties from oil and gas
exploitation in their lands.
The town of Caldwell, 25 miles to the west, fitted our requirements. Under the
leadership of Woody Callan, we acquired the well-run First State Bank in Caldwell
(FSBC) on June 6, 1986. It had a good depository base and low loan demand, ideal for
our purpose. We paid a premium of 1.34 times its capital, which was a smaller mark-up
than the market rate at the time. Woody led the formation of a new one-bank holding
company, Caldwell Capital Corporation (CCC), and found financing with a Houston
bank. The Federal Reserve Bank of Dallas cleared the transaction although it was a 100
% leveraged buyout. To provide the necessary capital, the holding company borrowed
73 % of the purchase price and some of the shareholders borrowed their share of the
remaining 27 %. We each guaranteed our share of the CCC’s debt. Several of the
Western shareholders entered into the purchase of FSBC, though we didn’t constitute a
majority. I took 5 % of the total ownership.
When the FDIC asked for bids to take over the failed Western in October 1987, FSBC
was the winner and it re-opened for business on the next working day under the name
of Villa Maria Branch of FSBC. In a roundabout way my involvement in the ownership
group continued although I was never a member of the new decision making group.
After Woody’s death and my departure from the Western board, the macro-economic
forces that were battering all banks continued to rattle FSBC. Soon it became
necessary to inject more capital and shortly thereafter the holding company became
insolvent because the bank was not producing enough earnings to keep the holding
company’s debt current. Eventually the Callan estate assumed all the owners’
obligations to the Houston bank and I paid my share of these obligations directly to the
estate. It was June 12, 1992, before I finally finished paying for the consequences of my
bank ownership adventures. All in all it was a worthwhile experience. Bottom line - I lost
plenty of money, but I enjoyed every minute of it because I learned so much, met many
fine people, helped more go in business by themselves, provided a bank for the
Autobiography.doc 133 of 239