A small Philadelphia bank that nearly failed two years ago is making a comeback.

Last week First Bank of Philadelphia announced a $202,000 profit for 1996 - its first in five years. But Carl Lingle, the bank's thrifty president and chief executive, said he wouldn't do much to celebrate.

Mr. Lingle joked that he would buy the 10-year-old bank's staff some of the city's famous soft pretzels. But he said he wouldn't chip in for mustard.

It's that same frugality that has turned around the $67.6 million-asset bank. After years of excessive spending, it was near collapse. But since taking over in 1995, Mr. Lingle has slashed overhead, cutting staff by nearly 70% and halving the bank's space.

"The headquarters was 9,000 square feet of office space," said chairman Hal J. Shaffer, a banking attorney. "It was very nice office space that would have been better suited for the Bank of America."

However, cutting expenses was only the tip of what was needed to rehabilitate the troubled bank, which had lost more than $7.4 million from 1992 to 1995.

The bank was under orders by federal and state regulators to increase capital. By late 1994 it was losing about $160,000 per month and loan delinquencies made up more than 20% of its loan portfolio.

In January 1995 an investors group composed of Mr. Lingle, Mr. Shaffer, and banker Jerome Goodman, who's now retired, agreed to raise $4 million in capital and assumed control.

The new investors followed an aggressive plan to collect on bad loans, Mr. Lingle said. The bank reduced its staff of 42 to 13 and went from two branches to one.

"I felt with an infusion of capital and hard collection efforts we could turn the place around, (but) not without some wailing and gnashing of teeth," Mr. Lingle said.

Mr. Lingle and Mr. Goodman had turned a bank around before. The two men mended the former First Peoples Bank of New Jersey and then sold it to CoreStates Bank for a hefty profit.

Selling First Bank is definitely on Mr. Lingle's mind, too.

But he said he's working on maximizing shareholder value first. The stock, which trades near $3, was offered to shareholders in 1995 at 25 cents a share. A one-for-10 reverse stock split in 1995 brought the stock price up to $2.50.

"The game plan now is to make it a good bank," Mr. Lingle said.

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