First Bank of Missouri has started a more profitable chapter of its life, but one of the architects of the turnaround is gone, and no one is willing to say why.
The $260 million-asset institution - remnant of a string of Missouri banks owned by the late real estate tycoon Frank Morgan - has rebounded from its dark days of just three years ago, when it lost $11.3 million.
The turnaround came during the brief tenure of Kenneth Fox, who joined the bank in late 1993 to work out problem credits.
Mr. Fox, who was the bank's president, left it early this year. The bank would say why, and Mr. Fox declined be interviewed.
"I have a feeling they felt that they had moved past what Ken was brought in to do," speculated Jerry Swords, a Kansas City bank consultant.
Profitability at First Bank of Missouri, which was created in the Kansas City suburb of Gladstone out of three other banks in the chain, has dramatically improved, and problem assets have declined, according to call report data from Sheshunoff Information Services.
At yearend 1993, return on assets was a negative 3.08%; return on equity, a negative 40.83%. But those ratios were a positive 1.92% and 30.15%, respectively, at Sept. 30, 1995.
From its $11.3 million loss in 1993, the bank turned around to a respectable $3.6 million profit for the first nine months of 1995. Moreover, the ratio of foreclosed real estate to total assets was down to 2.66% at Sept. 30, from 7.82% in 1993, and nonaccrual loans were 10.24% of total loans, down from 15.83% in 1993.
Mr. Fox "was an integral part in leading the management staff in the reduction and workout of the problem assets," said Ken Hollander, First Bank's executive vice president.
"I know the worst is behind us," said James B. Chappell, the bank's chairman. Now, it can refocus on new business, he added.
"Naturally we still have some problem assets that we are trying to work out," he said. But "we're ... trying to be aggressive, community-minded lenders."
The bank is focusing on two new lending areas, Mr. Chappell said - commercial Small Business Administration lending and real estate mortgage loans.
First Bank used to be part of a nine-bank chain with more than $8 billion of assets. Mr. Morgan, estimated by Forbes magazine in the mid- 1980s to be among the 400 wealthiest people in the country, with a net worth of at least $330 million, had built up his company in the 1970s primarily by buying failing banks, Mr. Swords said.
Some of his banks specialized in real estate loans, and most at least participated in the loans - for a while very profitably. When the real estate market crashed in the late-1980s, however, the banks were hit hard.
Asset problems soared, mainly on out-of-territory commercial real estate loans. First Bank's remaining nonperforming assets stem primarily from that period, Mr. Hollander said.
Two of Mr. Morgan's Missouri banks failed and later were acquired by Boatmen's Bancshares. His four Kansas banks have been working through their loan problems. His three remaining Missouri banks were streamlined in 1993 into First Bank of Missouri.
Mr. Morgan's troubles mounted when he was indicted on charges of real estate fraud in October 1992. He and three associates were also reportedly the subjects of a bank fraud investigation, though Mr. Morgan was never charged. He died of cancer in October 1993, at the age of 66.
Now that Mr. Fox is gone, First Bank is seeking approval to replace him with James Lewis, president of Security Bank of Kansas City, one of the Kansas institutions in Mr. Morgan's group.