With the federal guarantees on a large chunk of its student loan portfolio in limbo, River Forest Bancorp saw its nonperforming assets shoot up last year.

The experience has been a study in patience for the $2.1 billion-asset company, which owns nine banks in Chicago and its suburbs. For two years, since it was discovered that employees falsified some collection records, it has awaited word from the Department of Education on whether more than $6.8 million in student loans have lost their guarantees.

Because of the uncertainties, the bank included those loans in nonperforming assets at yearend 1995. A year earlier, the company's nonperforming student loans totaled just $131,000.

In mid-1994, the company discovered that some calls employees said they had made to delinquent borrowers didn't match the actual calls made, despite a tracking system to locate such discrepancies.

Student loan servicing rules require certain collection actions, including the number of calls to delinquent borrowers, to maintain their guarantee.

"I think that we were being quite diligent about the way we were handling this," said Robert J. Glickman, president and chief executive. "We didn't really contemplate the idea that our employees would cheat us."

Lenders are required to make eight calls to each delinquent borrower. All of the delinquencies in question got seven calls, but not the eighth. "If you actually did call people seven times ... how many would wake up on the eighth call?" and pay, Mr. Glickman asked.

River Forest subsequently fired about five part-time employees and has since implemented a new computer system to track calls to delinquent borrowers, he said.

The company, which has about $400 million in student loans out of total loans of $1.56 billion, notified the Department of Education of the problem two years ago. The agency, which issued the guarantee, is determining whether the loans lost their guarantees, and if they did, whether to reinstate them.

Because that process "is slower than we would have thought," as Mr. Glickman put it, millions of dollars in student loans were reclassified.

A spokesman for the Department of Education said he could not confirm or deny a specific investigation. He added that, in general, there is no standard time frame for resolving investigations.

Mr. Glickman said he hopes the guarantees will be re-established, eliminating nonperforming status.

"I don't think the government really has been harmed," he said.

Such problems could plague any type of bank loan collections, Mr. Glickman said. But student loans have an added twist: "The unique thing about student loans is, student loans are guaranteed if you follow the rules," he said.

Nonetheless, Mr. Glickman said, River Forest, whose 1995 net income was up 49% over 1994, will maintain its student lending niche. "We're going to continue one way or another," he said. "It's a main business for us."

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