From his office in Lincoln, Mont., Roger Kornder has a picture-perfect view of the snow-covered Rocky Mountains.

It's the kind of landscape that appeals to snowmobilers and skiers, but it's also home to lumber mills and cattle ranches, the mainstay business customers of Mr. Kornder's First Bank of Lincoln.

In its 26-year life, tiny First Bank has built a reputation as a solid small-business lender in its community of 1,500 just 20 miles from the Continental Divide.

With a return on assets of 3.49% at Sept. 30, $9.5 million-asset First Bank is ranked by American Banker as the nation's most profitable community bank with a specialization in small-business lending.

"They do a damn good job for a small bank," said Jim Johnson, president of Hi-Country Beef Jerky in Lincoln, one of several small-business owners in Lincoln who raved about First Bank.

"For most of the small businesses, it's the major player," he added. "They support about everything that's going on. They're the typical small- town small bank."

About half the bank's portfolio comprises commercial loans, most of them to the region's cattle ranches and logging companies.

Since there are no large borrowers in the region, all of its commercial loans are small-business credits. Because of its size, the bank uses programs developed by the Small Business Administration and Farmer's Home Administration to enhance its own slim lending limit.

Competition isn't much of a problem for First Bank, since it's the only lender within 60 miles. As a result, virtually all of Lincoln's residents and businesses are its customers.

"I pretty much depend on them for everything on the financial end," said John E. Cloninger, owner of Dearborn Logging in Lincoln.

"It's a tremendous asset to small businesses in the community," he added. "It's not a bank that's a subsidiary of a bigger bank. And I like dealing with a bank where I can deal with the people personally."

First Bank also maintains a high level of credit quality, acting on loans as soon as they're 10 days past due in order to keep nonperforming assets to nil and delinquencies to less than 1% of all loans.

Besides his success in lending, Mr. Kornder attributes the bank's performance to its very low maintenance costs. With only five employees, including him, sharing the duties in one office, and no holding company, "we aren't burdened with a tremendous amount of overhead."

The result has been a stable income stream, which produced $144,000 of net income for the first six months of 1995. And performance also is reflected in the bank's five-star rating from Bauer Financial Reports, Coral Gables, Fla., a rating it has maintained for the past 18 quarters.

But the community's economic makeup is slowly changing and, with it, the bank's customer base. With the U.S. logging industry in decline for five years and small lumber mills closing, that portion of the bank's business has dropped, Mr. Kornder said.

In response, First Bank has been expanding its trade area, reaching out 90 miles from Lincoln into the nearby cities of Helena, Missoula, and Great Falls to get new business credits.

Moreover, the lumber industry could soon be supplanted in local prominence by mining. Philips Dodge and Canyon Resources have applied to the state for approval to operate a new mine in the area jointly for about 20 years. Such an operation could employ 300 new residents, adding to the bank's customer base and creating a market for more housing and businesses.

"That would change a small community a bunch," Mr. Kornder said. "If you have 300 people out there with new jobs, making $30,000 plus, that'll have a rippling effect on additional services needed in the community."

The bank has also begun to take advantage of Lincoln's growing popularity as a stopover for tourists traveling the 400 miles from Yellowstone National Park in Wyoming to Glacier National Park in Montana. Lincoln is exactly halfway between, inspiring a hospitality industry that now numbers five motels and a bed-and-breakfast - all First Bank customers.

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