The investors who bought First Bank of Kansas City a year and a half ago knew that keeping it alive would be a challenge.
The Missouri bank was losing money, and assets were slipping. The future was uncertain.
Then, in March of last year - just five months after the new team took charge - First Bank was hit with a "substantial noncompliance" on its Community Reinvestment Act exam - the worst of four possible marks. Only six banks got that grade last year.
Over the past 12 months, $10.3 million-asset First Bank has taken strides at improving its record, its officials said.
"If we had a CRA exam today, it would not be any problem," said chairman Jim Bergfalk.
But not everyone in the community has noticed the new efforts.
Michael Shaughnessy, a business analyst with the Community Development Corporation of Kansas City who works with the black community in the bank's market, said the bank has "not made a significant impact" in getting "known as a player" in community lending.
"Being as small as they are, it's not easy," Mr. Shaughnessy said, "but they have to make the efforts."
The investors who took over in October 1993 found a declining CRA program.
First Bank used to be Landmark Bank of Kansas City, a subsidiary of St. Louis-based Landmark Bancshares. In 1991, St. Louis' Magna Group Inc. acquired Landmark, and First Bank was in limbo waiting to be sold.
In its CRA exam report of March 1994, the Federal Deposit Insurance Corp. said that First Bank's board had not tried hard enough to determine the community's credit needs, and that the bank had made only minimal efforts to lend in minority and low- and moderate-income areas, particularly for residences.
The FDIC said its findings signaled "discriminatory credit practices" involving Equal Credit Opportunity regulations.
Thomas C. Owens, First Bank's president and chief executive officer, said the board has since moved to rectify the problems. For instance, the bank set up a mortgage department six months ago; the department has done about a third of its business in areas the exam said First Bank was not adequately serving, Mr. Owens said.
The bank also has begun using government-guaranteed loan programs, which the FDIC had said it was not using, Mr. Bergfalk said.
Mr. Owens said First Bank, which changed its name last year, also has dropped a $2,500 loan minimum. The FDIC thought the minimum might discourage applicants from applying for small loans.
Though the bank lost $135,000 in 1994, Mr. Owens said first-quarter 1995 earnings would probably come in at $4,400.
"In the next few years, we're going to be a player in the small-bank market," he said.