Admirers Wonder What’s Next for Casey After First Republic

Not long after installing Albert V. Casey as chairman and chief executive of First RepublicBank in Dallas, federal regulators told him to fire the bank’s president. Casey refused, invoking the authority he had demanded over personnel as one condition for taking over the bank.

Insiders at First Republic said the bank president, Joseph R. Musolino, had become Casey’s “eyes and ears” in an earnest effort to save the biggest banking company in Texas from failure or being sold to an out-of-state owner--a fate only slightly better in some minds.

“I said OK--even though our general policy had been to try to change the command at the bank,” L. William Seidman, chairman of the Federal Deposit Insurance Corp., said in a telephone interview this week.

FDIC, which regulates the nation’s commercial banks, had stepped in with a $1-billion loan to First RepublicBank in March to avert its failure. Then the regulators forced out most of the old management and persuaded Casey to take over on April 12 until a permanent solution was found.

While Casey won the battle involving Musolino, he lost the war to keep First Republic independent.

On July 29, FDIC announced that the company would be taken over by NCNB Corp., a banking concern with headquarters in Charlotte, N.C., in a deal that calls for about $4 billion in FDIC aid, the second-largest bank bailout in history.

The rejection of his restructuring plan was a setback for Casey, who had gone from caretaker to proud parent, or at least grandparent, in less than four months. And it raises questions about what may be next on the agenda for a 68-year-old corporate manager who cannot seem to retire.

Major Disappointment

“This was clearly a major, major disappointment for me personally and a great loss for the community,” Casey said Wednesday in a telephone interview from Dallas. “Necessarily, an out-of-state bank could very well have different priorities than an independent Texas bank, and we need capital very badly in Texas to help in its reversal.”

Casey did not criticize the regulators or NCNB, but he said his proposal for reorganizing the bank by spinning off its bad loans into a new entity financed by FDIC was a better plan.

Seidman said Casey’s plan was more expensive and riskier than the NCNB proposal. Also rejected were proposals from Wells Fargo in San Francisco and a group of Texas investors led by former Sen. John Tower (R-Tex.). New York’s Citicorp withdrew a proposal before the decision was made.

Seidman praised Casey for restoring confidence in First Republic after runs by corporate depositors and its deteriorating real estate loans resulted in a loss of $1.5 billion in the first quarter of 1988.

“He held the place together until we could come to a permanent solution,” Seidman said.

Charles H. Pistor Jr., a former First Republic executive who is chairman of NorthPark National Bank of Dallas, said: “Al breathed a lot of encouragement and hope into the situation for the employees and the customers. He has a winning way.”

‘All-Purpose Running Back’

Casey, a Boston native, received an MBA from Harvard in 1948 and went to work in New York as a financial officer for Southern Pacific railroad. In 1961, he joined Railway Express Agency and spent two years helping to rejuvenate the East Coast transportation company.

In 1963, Casey became a vice president at Times Mirror, which publishes the Los Angeles Times. He rose to president in 1966 and played a key role in the company’s diversification into other publishing fields and the acquisition of two newspapers, Newsday on Long Island, N.Y., and the Dallas Times Herald.

“He was one of the first professional corporate managers that my father brought in in those days,” said Otis Chandler, chairman of the executive committee of the Times Mirror board of directors. “He is sort of an all-purpose running back.”

Chandler was publisher of The Times and also ran the corporation’s newspaper and forest products divisions in the 1960s at a time when his father, the late Norman Chandler, was chairman and chief executive.

Casey left Times Mirror in 1974 to become chairman and president of American Airlines, where he gained a national reputation for turning around a troubled company.

“I fired them all and cleaned them out,” Casey once said of his efforts to strip away unnecessary staff and subsidiaries at American.

From losses of $49 million in 1974, he guided the company to $228 million in profit in 1984. He also moved its headquarters from New York to the Dallas-Ft. Worth airport.

Not long after retiring from American at age 65 in 1985, Casey was tapped for his toughest assignment yet.

Wanted Longer Stay

On Jan. 7, 1986, he became postmaster general when the giant U.S. Postal Service was over-staffed and losing money. Casey said the day he took the job that he would stay only six to nine months, so he had to move quickly. Eighteen days later, he fired two top managers and reassigned several others in a prelude to a far-reaching reorganization before he quit and returned to Dallas in August, 1986.

While some credit Casey with taking decisive action to streamline the postal bureaucracy, others criticize him for acting before he understood the complexities of an organization with 740,000 employees and for staying too short a time.

At First Republic, Casey wanted to stay a little longer than he was allowed.

“He thought and hoped he’d be there until he put the new man in place and then he’d leave,” said his brother, John J. Casey, a retired airline executive.

Instead, Casey will spend the next few months supervising the dismantling of the First RepublicBank holding company, which was left as a shell in shifting the banks to NCNB, and resuming his business affairs.

Casey said he will pay more attention to his duties as chairman of the executive committee of the board of Memorex-Telex, a Dutch computer equipment maker, and his role as an adviser to a merchant banking company, Mason Best, on acquisitions in the media industry.

But his brother does not expect him to remain outside the public spotlight for long, saying: “He’ll pop up in something interesting. He’s never looked for any of these situations. They have always come to him.”