It's been a long eight years for Bill Beall.
Since taking the helm of a bruised First State Bank of Miami in 1988, the 62-year-old banker has nursed the tiny Texas institution back to health and repaired a public image battered by a small-town scandal and multiple lawsuits.
The $13.6 million-asset bank, a subsidiary of Miami Bancshares, suffered losses of about $6 million in the late 1980s because of embezzlement by the bank's top three officers.
The scandal divided the small community, as friends of the former bank officials refused to acknowledge their guilt, even after convictions. And the negative publicity caused some of the bank's business to walk out the door, temporarily.
After several years of recapitalization, collecting on sour loans, and settling litigation stemming from the former officials' deeds, bank officials have now brought First State back into the black.
And its performance since 1992 earns its ranking as the top survivor among community banks, according to a study by American Banker.
"We've made a very nice turnaround," Mr. Beall said. "Most of our customer base is stable, and our loan demand is quite strong for a small country town."
For 1995, the bank reported net income of $188,000 and return on assets of 1.46%. The bank still has more than $2.5 million of net tax-loss carryforwards but did not use much of them in 1995, Mr. Beall said.
With a Tier 1 leverage capital ratio of more than 12% and no foreclosed property or other repossessed assets, the bank now sports a healthy balance sheet. Even the $400,000 of nonperforming loans are 90% guaranteed by the Farmer's Home Administration.
"We're very pleased. We have a good board and an excellent staff and a fine community in which to do business and live," Mr. Beall said. "We feel that our stockholder base and our customer base is extremely happy with the results at the bank."
However, the years of struggle did catch up with many of the bank's directors and key shareholders, who decided last year that they were ready to sell the bank and get out of the business.
That prompted a local cattle rancher, who didn't want to lose hometown ownership, to step in. With the help of his family, F.M. "Buster" Carter bought out the disaffected shareholders and took 60% ownership in the bank.
"It's amazing this little bank's still open," Mr. Carter said. "Probably if it hadn't been the only bank in this county, I wouldn't be a bit surprised if it would've closed."
Mr. Beall, a turnaround specialist who had resuscitated several other rural Texas banks before coming to Miami, was hired in March 1988 after the bank's former chairman, president, and senior vice president had been arrested.
In addition to outright embezzlement, the former officers had approved flawed personal loans through businesses they owned. When those loans went sour, the bank found itself saddled with foreclosed properties and legal expenses on top of its other losses.
That caused the capital ratio to drop to a dangerous level near 3% in late 1988.
While fresh capital solved that immediate woe, problem assets were hovering at 15% of total assets as late as 1992. But regulators never imposed a cease-and-desist order on the bank.
The bank also spent much time and money battling lawsuits by customers who had been drawn into faulty business relationships with the bank by the discredited former officers. Most suits have been settled, but a decision favoring the bank in one case is still on appeal.
"It could have gone under at one time, but we were able to stay afloat," said Mr. Beall, who has been in banking since 1958. "It's been a fun challenge. That kind of a challenge always is, if you win."