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Inside a Bank Rescue : In a Room Filled With Cigar Smoke, the Two Sides Faced Off. Seafirst Was Near Bankruptcy. Bank of America Had Money to Spend. A Tale of High-Stakes Deal Making.

September 07, 1986|HOPE LAMPERT | Hope Lampert is the author of "Behind Closed Doors," to be published in November, from which this article is adapted

Dick Cooley and Harry Mullikin sat in Cooley's office at Wells Fargo Bank's regional headquarters on South Flower Street in Los Angeles, studying Mullikin's list of possible chairmen for Seafirst. No one seemed quite right.

"We're running out of time," said Mullikin, chairman of Westin Hotels and head of the Seafirst board's search committee. "We've got to have a man by mid-December, and it's already Thanksgiving."

Cooley looked at Mullikin for a minute. "I just told my board that I'm going to resign next year," he said. "I've been chief executive officer of Wells Fargo for long enough." Cooley paused. "I've always said I was going to retire when I turned 60. I'm 59 now."

Mullikin had heard Cooley say that he was going to retire at 60, but he'd never quite believed it. "What are you going to do?" he asked. "I can't imagine you sitting still."

"I wish there were a banking job that looked right," said Cooley.

"I've got one for you," said Mullikin. "Chairman of Seafirst."

Cooley stared.

"I was joking," Mullikin said. He paused. "Let's get back to the list."

"Running Seafirst would be a new challenge," Cooley said. After all, Seafirst had lost $56 million in the third quarter of 1982, and it looked as if it might lose more than $60 million in the fourth. "I might be interested."

Mullikin was startled. "If you're really interested," he said, "why don't you come up to Seattle and talk to the board?"

Cooley looked straight at Mullikin. "I'll do that," he said. "Next week."

Later that afternoon, Mullikin put in a call to each of the 17 members of the Seafirst board of directors to say that Dick Cooley was looking. "I hope he takes the job. If anyone can save the bank, Dick Cooley can."

DICK COOLEY IS IN CONstant motion. Today, at 62, he looks 42--tall, slender, with light brown hair and glittery gray eyes--and he attacks his work with the zip of a man of 22. He skis in the winter, boats in the summer and reads escape fiction all year round--he says he reads too much nonfiction on the job. Cooley lost his right arm at the shoulder when his fighter plane was shot down by the Germans during World War II; he wears a hook as a right hand, yet he plays squash and golf (his handicap is 21). He has a huge ego. At Wells they called him "Richard P."

Cooley was born in Dallas and majored in industrial engineering at Yale. He studied hard, but he played harder; he won letters in football, tennis and squash. After he graduated in 1944, Cooley joined the Army Air Corps; when he got back to the States five years later, he signed on at American Trust Co. in San Francisco. He had wanted to be an engineer, not a financier--he joined American Trust because he needed a job--but he turned out to be quite a banker. He was named a vice president in 1957, a senior vice president in 1964 and president of Wells Fargo, the new owner of American Trust, in 1966. He was 43 years old.

Under Cooley, Wells grew from a sleepy San Francisco bank into a regional giant, the brains behind MasterCard, the only bank card that held its own against the BankAmericard. The Wells loan portfolio leaped from $4.2 billion in Cooley's first year to $24 billion in 1982; at the same time, profits skyrocketed from $16.8 million to more than $100 million.

Lots of people asked Cooley for help; he was one of the West Coast's most esteemed bankers. Naturally he had heard about Seafirst.

"See Seafirst First." For more than a hundred years, the Seattle-First National Bank had been the chief bank in the Pacific Northwest. It was the bank where Washington banked: half the households in the state; two-thirds of the region's "middle market" companies--the business customers bigger than mom-and-pop stores but too small for the Fortune 1000-plus giants such as Carnation, Boeing, Weyerhaeuser and Westin Hotels. Banking experts called Seafirst farsighted, well managed, a model for even the country's largest banks. In 1981, the bank proudly announced its 20th straight year of increased savings; by then, the loan portfolio totaled $800 million.

Seafirst had traditionally made its loans just in the Pacific Northwest, but as the bank got bigger it opened seven domestic and foreign branch offices and encouraged officers to lend to national companies and to South American countries. In 1979, Seafirst started to make energy loans. At first, the bank lent money to large oil companies on the West Coast and in Alaska. Then Seafirst opened a branch in Oklahoma City.

The well-established Texas banks had a lock on loans to reputable independents. That meant that Seafirst had to lend to less credit-worthy borrowers--gas drillers in Oklahoma, wildcatters in Texas, small refiners such as NuCorp Energy and Good Hope Refineries--who were willing to pay high interest rates.

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