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INTERFIRST CORPORATION

INTERFIRST CORPORATION. InterFirst Corporation, which developed from the National Exchange Bank of Dallas, First National Bank in Dallas, and First International Bancshares Corporation, was a multibank holding company headquartered in Dallas. The National Exchange Bank of Dallas was founded by business partners William H. Gaston and A. C. Camp in 1868. Through a series of mergers, consolidations, and changes, including incorporation of a separate Exchange Bank of Dallas in 1874, this firm ultimately became the First National Bank of Dallas. The original bank expanded under the direction of Nathan Adams, who, after starting as a clerk in 1889, helped it to build on the profits of southwestern cotton and the East Texas sawmills. In 1887 the bank nationalized as National Exchange Bank of Dallas, and in 1897 it began to integrate with the acquisition of the Mercantile National Bank. Adams aided cotton farmers in the panic of 1907 and made Haroldson Lafayette Hunt his first important loan in the 1930s, based on oil leases in the East Texas oilfield that Hunt had just obtained from Columbus M. (Dad) Joiner. Adams's bank and the National Bank of Dallas merged in 1900, and the new firm acquired two other key Dallas banks, the American National Bank in 1905 and the City National Bank in 1929. After 1929 the resulting enterprise was known as the First National Bank of Dallas. Despite its success in building on the emerging oil industry, First National of Dallas soon faced growing competition from another Dallas bank, Republic Bank. In 1950 the firm employed former Republic executive Ben Wooten to help restore its supremacy. The rivalry with Republic also took the form of an architectural contest to see which company could dominate the Dallas skyline. First National topped Republic's tower by thirty feet in 1965, but lost its lead shortly thereafter when Republic completed the Republic Bank Tower. In the mid-1970s First National again surpassed Republic by completing what was then the tallest building in the Southwest.

The Bank Holding Act of 1970 reversed previous restrictions, allowing banks to form holding companies and acquire other banks. It led to the foundation of First International Bancshares, a bank holding company formed by the merger in December 31, 1972, of First National Bank of Dallas and the Citizens Bank and Trust of Houston. Multibank holding companies were perceived to hold a competitive advantage over single-bank holding companies. Bankers expected significant advantages from merging two banks that were successful in their own markets-particularly two large, well-regarded banks (the First National Bank of Dallas was the second largest bank in Dallas, and the Houston Citizens Bank and Trust was the sixth largest in Houston). First National president Dewey Presley, born in Gilmer, Texas, and chairman of the board Robert Stewart III, of Dallas, are credited with organizing the holding company. The more conservative style of the older Presley helped balance the aggressiveness of Stewart's youth. Stewart, whose grandfather had been chairman of the board of First National, and who joined the bank in 1951 at the age of twenty-six, had become its president in 1960. Elvis Mason of First Security National Corporation of Beaumont joined the firm to work with member banks. The holding company pursued an aggressive growth strategy that not only established banking links between Dallas and Houston, but also acquired banks in El Paso, Abilene, Harlingen, Galveston, Odessa, Denison, Irving, Bellaire, and Tempe. Further expansion was planned outside major banking centers, in selected smaller communities likely to grow. Stewart and Presley increased the holding company's profitability by spreading the cost controls and heavy marketing orientation of the First National Bank of Dallas to other banks that they acquired, and by maintaining the local managements and boards of the acquisitions. Refused by the Federal Reserve in only one of its acquisition attempts, the firm acquired a total of fifty banks covering all major Texas markets.

In 1981 the holding company changed its name to InterFirst Corporation and the name of its member banks to InterFirst Bank-Dallas or InterFirst Bank-San Antonio to further its brand image. By 1986 InterFirst was the third largest holding company in Texas, able to compete effectively with the largest Texas-based holding company, RepublicBank Corporation. Unfortunately, as part of its growth strategy during the 1980s, InterFirst lent a significant amount of money to the real estate industry in Texas. As Texas real estate fell in value by the end of the decade, so did the quality of InterFirst's loan portfolio. Though its assets had reached more than $5 billion, by 1987 the company was in need of a merger partner and faced reorganization. Believing that RepublicBank Corporation had weathered the worst of its credit problems, InterFirst merged with its competitor to form First RepublicBank Corporation. But the new corporation's condition was no better, however, and it failed within twelve months. The Federal Deposit Insurance Corporation closed all of the holding company's banks in what was then the largest bank failure in United States history, putting $3.2 billion into member banks to restore them to a zero-capital position.

NCNB Corporation, a North Carolina bank holding company with banks in the South and Southeast, bought 50 percent of the holding company stock and held an option for the other 50 percent, which was owned by the FDIC. They changed the name of the holding company to NCNB Texas National Bank Corporation and merged the banks into one bank known as NCNB Texas National Bank, National Association. In 1990 NCNB exercised its option to purchase the FDIC's half interest. In 1991 NCNB Corporation changed its name to NationsBank Corporation, and the name of its Texas subsidiaries to NationsBank of Texas, Incorporated, and NationsBank of Texas, National Association. Other significant Texas institutions acquired by NCNB included University Savings Association and NBC of Texas.

BIBLIOGRAPHY: 

Nathan Adams, The First National in Dallas (Dallas, 1942). Emory A. Bailey, Who's Who in Texas (Dallas: John B. McCraw Press, 1931). Forbes, January 6, 1992. Harry Hurt, Texas Rich (New York: Norton, 1981). Texas Monthly, May 1974.

Jeff Seidel

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Jeff Seidel, "INTERFIRST CORPORATION," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/coi01), accessed July 28, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.