James A. Saitz's philosophy for cleaning up a troubled bank is simple: solve problems one step at a time, and don't ignore the rest of the business.

"Even if you take a small step in the right direction, you're going to eventually get to the end goals," he said.

Mr. Saitz, 45, should know. Most recently, he has employed his strategy at Missouri Slate Bank, St. Louis, which at its worst had $2.2 million in nonperforming loans. He previously labored over loan problems at the city's former Landmark Bank.

Cleanup management can't be overwhelmed by the enormity of a bank's problems, said Missouri State's president and chief executive. Mr. Saitz encourages "success on a day-to-day basis" on the road to recovery.

His work is paying off at Missouri State, which like many banks suffered from, an economic downturn not long ago. He has slashed nonperforming loans to $477,000 at June 30 from $1.2 million last September.

By yearend, he counts on cutting them much further and predicts return on assets of 1%. This after Missouri State experienced operating losses for the last three calendar years averaging $750,000, he said.

Management can't ignore the rest of its business during a bank's resurrection, he said. "You have a tendency to concentrate on the problem issues alone, and the good, quality relationships you have leave," he said. "It's a balancing act."

Missouri State has heeded this lesson: Since the end of the year, its deposit base is up 23%, loans are up 22% and total assets have increased 35%, Mr. Saitz said.

Hired as a Consultant Originally a consultant to Missouri State when interim management was attempting to get the bank back on track in 1992, Mr. Saitz decided to acquire it because he knew its fundamentals better than anyone.

He formed Community Charter Corp. with 38 local investors and acquired the bank on May 31. The holding company infused $1.8 million, which raised capital levels to 9.3% at the end of June from 4.2%.

Mr. Saitz. who graduated from Central Missouri State University, said he spends about 85% of his time on Community Charter and Missouri State. When he takes a break, it's usually to play golf or ride in the family boat with his wife.

Looking for More

Community Charter will seek to acquire or start other community banks m greater St. Louis, filling a niche for financial service institutions "that are oriented toward the market that has to be abandoned by the larger, players," he said.

Mr. Saitz learned the ropes of troubled loan portfolios when he was tapped to clean up the one at Landmark Bank, which suffered a $28.7 million loss in 1990 after raising its reserves to cover potential loan losses.

He had joined the St. Louis bank in 1986 and continued to work through the portfolio after Magna Group acquired it in 1991. In 1992, he resigned from Magna to start his consulting business.

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