ROCKVILLE, Md. -- Woman-owned FWB Bank is a portrait of tenacity.

Over the past three years it lost $7.5 million. It expects this year's loss to come in at $700,000.

But the 14-year-old bank's founder, Joan H. Schonholtz, isn't about to give up.

"We know it can be profitable," said Ms. Schonholtz, who is also the institution's chairwoman.

"It was profitable from day one, when they told us it would take five years to make a profit." she said.

"We still feel there's a need."

Vote of Confidence

Ms. Schonholtz has her supporters. Stockholders and members of the community poured $1.9 million into the bank through a private placement to put it back into federal capital compliance.

Their show of faith may be rewarded soon, as the bank is expected to make a small profit in the fourth quarter -- its first in a year.

"We have been digging out of a very big hole," said Steven K. Colliatie, the bank's president and chief executive.

"Our challenge is to seek out business that has not been focused on, and to make that profitable for us."

Name Change

The bank was founded in 1979 as First Women's Bank of Maryland to support women-owned business. The name was changed in November 1990 in an attempt to appeal to a broader market.

"We are now targeting professional people and small to medium-size businesses with no banking relationship with the big banks," said Ms. Schonholtz.

"That really goes along with the women's focus, because a lot of women fall into that category."

The new emphasis at the $38.6 million-asset institution comes after it was badly burned by construction and commercial real estate loans.

Rapid Descent

In its lending heyday in 1988, the bank had $78 million of assets and virtually no loan problems.

Two years later, nonperforming assets reached nearly 17% of total assets, leading to a loss of $1.6 million, according to Sheshunoff Information Services Inc., an Austin, Tex.-based bank and thrift tracking firm.

FWB's losses reached $3.5 million in 1991 and $2.4 million in 1992, causing the bank to fall below federal requirements for Tier 1 capital.

Last December, at the height the bank's problems, its Tier 1 capital ratio slipped to a low of 4%.

Total assets have fallen by 43.8% since the 1989 high of $88 million.

~A Classic Turnaround'

"The bank was a basket case," said Lew Sosnowik, a bank analyst with Rockville, Md.-based Koonce Securities Inc. "It is a story of survival -- a classic turnaround."

Two-and-a-half years ago FWB's directors brought in Mr. Colliatie, hoping he could turn the bank around.

Mr. Colliatie had worked for several community banks in Colorado -- the last was Century Bank, Denver -- before coming to Washington to work for another minority-owned institution.

Mr. Sosnowik says he is impressed with the 42-year-old banker, particularly for managing to raise the capital while attending to the bank's day-to-day affairs.

Chargeoffs Recovered

In addition, this year the bank has recovered $1 million of the roughly $6 million in loans it charged off over the troubled three-year period. Less than four-tenths of 1% of its $21 million loan portfolio is nonperforming.

"We've cleaned up the entire portfolio," Mr. Colliatie said.

He has also has kept tight controls on costs.

Since he took over there has almost been a complete turnover in staff, mostly through attrition, Mr. Colliatie said.

There is only one holdover in his slimmed down crew of 28.

When Mr. Colliatie arrived, most employees "had a mindset of how things used to be," he said.

"I couldn't get them to convert to how things need to be to moved forward" he said.

"Most of the people saw they didn't fit in and made the decision on their own to leave."

A Dose of Reality

Mr. Colliatie foresees expansion, but tapping the small-business loan market will be no easy task.

"Big banks can throw a lot of resources into buying a segment of the marketplace," he said.

"The deals of the '80s are not going to be there for us in the '90s."

Ms. de Guzman writes for the Medill News Service. !!!BEGIN TABLE FWB Bank at a GlanceHeadquarters Rockville, Md.

Presidentand CEO Steven K. ColliatieAssets $38.6 millionDeposits $35.8 millionLoans $20.7 millionROA -2%

Tier 1 capital ratio 7% Data as of Sept. 30 !!!END TABLE

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