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First Westroads Bank Omaha NE Performance Evaluation

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First Westroads Bank Omaha NE Performance Evaluation Powered By Docstoc
					                         PUBLIC DISCLOSURE
                                     April 11, 2005

                 COMMUNITY REINVESTMENT ACT
                  PERFORMANCE EVALUATION

                              FIRST WESTROADS BANK
                                   RSSD# 222754

                             15750 WEST DODGE ROAD
                             OMAHA, NEBRASKA 68124

                          Federal Reserve Bank of Kansas City
                                  925 Grand Boulevard
                              Kansas City, Missouri 64198

NOTE: This document is an evaluation of this institution’s record of meeting the credit
      needs of its entire community, including low- and moderate-income
      neighborhoods, consistent with safe and sound operation of the institution.
      This evaluation is not, nor should it be construed as, an assessment of the
      financial condition of this institution. The rating assigned to this institution
      does not represent an analysis, conclusion or opinion of the federal financial
      supervisory agency concerning the safety and soundness of this financial
      institution.
                                                                                                                        First Westroads Bank
                                                                                                                                April 11, 2005


                                                           TABLE OF CONTENTS



Institution’s CRA Rating ....................................................................................................................             2

Description of Institution....................................................................................................................            2

Description of Assessment Area......................................................................................................                      3

Conclusions .........................................................................................................................................     5

Glossary...............................................................................................................................................   9




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                                                                        First Westroads Bank
                                                                                April 11, 2005


                                  GENERAL INFORMATION


INSTITUTION’S CRA RATING: This institution is rated Satisfactory.

First Westroads Bank has a satisfactory record of helping to meet the credit needs of its entire
assessment area, including low- and moderate-income neighborhoods, in a manner consistent
                                               h
with its resources and capabilities. Four of t e five criteria used in evaluating small bank
lending performance were relevant to this review and are as follows:

   •   Loan-to-Deposit (LTD) Ratio
   •   Lending Inside the Assessment Area
   •   Lending to Businesses of Different Revenue Sizes and Individuals of Different Income
       Levels
   •   Geographic Distribution of Loans


The bank’s responsiveness to complaints regarding its performance under the Community
Reinvestment Act (CRA), the fifth criteria used to assess small bank performance, was not
evaluated because the bank has not received any such complaints.

Conclusions about the four performance criteria were based on data compiled from a
statistically-derived sample of loan files for each major product line. The major product lines
were determined through discussions with bank management, a review of the Report of
Condition and Income (Call Report), and a review of the number of loan originations since the
bank’s last CRA examination in September 1999. The two loan types selected for review were
commercial and home equity loans.

First Westroads Bank LTD ratio reflects a reasonable effort to extend credit in a competitive
lending market. In addition, a majority of the bank’s lending activity occurred inside its
assessment area. The bank’s distribution of loans among businesses of different revenue
sizes and individuals of different income levels was reasonable . Finally, the bank’s geographic
distribution of loans reflected a reasonable dispersion throughout the assessment area.


DESCRIPTION OF INSTITUTION

First Westroads Bank’s main office is located in western Omaha, Nebraska and the bank
operates one branch office in western Omaha also. Both offices contain a drive-through facility
and a cash dispensing automated teller machine (ATM). The bank also operates a large ATM
network throughout the eastern half of the State of Nebraska. This network currently consists
of 62 cash dispensing ATMs, most of which are located at convenience stores and gas
stations.



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                                                                                     First Westroads Bank
                                                                                             April 11, 2005


To better serve the needs of its commercial customers, the bank also operates a courier
service. Known as MobileConnect, this service retrieves deposits, loan documents, and new
account applications from the offices of commercial customers. The courier service operates
daily and is provided free of charge to most of the bank’s commercial customers.

The analysis of the bank’s CRA performance considers the bank’s financial impediments, local
economic conditions, and demographics, including the competitive environment in which the
bank operates. Although First Westroads Bank is subject to strong competition from other
financial institutions within its assessment area, there are no legal impediments that currently
impact the bank's ability to lend. The bank’s lending activity is primarily devoted to commercial
financing. According to the December 31, 2004 Call Report, the bank’s total assets were
$176,086,000, including loans totaling $126,096,000 and deposits totaling $142,241,000.
Table 1 illustrates the breakdown of the bank’s loan portfolio by product.


                                        TABLE 1
                    DISTRIBUTION OF LOANS IN BANK’S LOAN PORTFOLIO
                                AS OF DECEMBER 31, 2004
                                                                                     Amount
                                    Type of Loan
                                                                                      $(000s)   Percent
  Loans Secured by Real Estate:                                                      101,768      81
                                                                 Amount
                                                                 $(000s)   Percent
    Loans secured by 1- to 4-family residential properties       13,058      13
    Loans secured by multifamily properties                        7,206      7
    Construction and land development loans                      32,909      32
    Loans secured by farmland                                        865       1
    Loans secured by nonfarm, nonresidential properties          47,730      47
  Consumer Loans                                                                       1,775       1
  Commercial Loans                                                                    19,812      16
  Other Loans                                                                          2,741       2
  TOTAL                                                                              126,096     100

The bank’s performance under the CRA was last evaluated at the September 14, 1999
examination conducted by the Federal Deposit Insurance Corporation (FDIC), at which time it
also was assigned a satisfactory rating.


DESCRIPTION OF THE BANK'S ASSESSMENT AREA

First Westroads Bank’s assessment area consists of 104 census tracts in the western portion
of Douglas County, which is included in the Omaha -Council Bluffs Metropolitan Statistical Area
(MSA). Based on 2000 census data, the assessment area has a population of 345,542 and
appears more affluent than the MSA as a whole. This is evidenced by higher median family
income levels and median housing values. The area also has experienced a strong level of
growth while maintaining a diversified and overall stable economy.


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                                                                       First Westroads Bank
                                                                               April 11, 2005


The economy of the Omaha -Council Bluffs MSA mirrors that of the assessment area. The
economy is well diversified and this diversification has maintained the area’s annual
unemployment rate well below the average reported for the United States throughout the past
decade. The area’s cost of living also is below the national average, and although housing
costs are rising, MSA median housing prices are 29 percent below the national average.

Over the past six years, downtown Omaha has seen the completion of several major
development projects which have significantly improved the visual landscape of the area.
These projects have included redevelopment of the riverfront area to include restaurants, boat
docks, and pedestrian walk paths, and the construction of a new convention center, arena,
performing arts center, and an executive training facility operated by the Gallup organization.

Offutt Air Force Base is now home to the United States Strategic Command. As a result,
Omaha has attracted five new defense-related companies in the past two years. Other
corporations also have their headquarters based in Omaha and several have recently
completed construction of new headquarter facilities. These corporations include Gallup,
Union Pacific Corporation, First National Bank, ConAgra Foods, and O’Keefe Elevator
Company.

Members of the community were interviewed during this review to gain perspective on local
economic conditions and potential credit needs. These contacts provided perspectives as an
economic development official and a representative of a local housing organization.
Information obtained from the economic development official confirmed that the local economy
is healthy. The official also stated that Omaha has greatly benefited from effective
public/private sector partnerships which continue to support economic growth.

Table 2 summarizes the characteristics of the bank’s assessment area based on 2000 Census
data and 2004 Dun and Bradstreet data .




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                                                                              First Westroads Bank
                                                                                      April 11, 2005


                                       TABLE 2
                            ASSESSMENT AREA DEMOGRAPHICS
                                                                    Families <        Families by
    Income                 Tract              Families by        Poverty Level as        Family
   Categories           Distribution         Tract Income        % of Families by       Income
                                                                       Tract
                        #          %           #          %          #         %        #        %
Low-income               0         0.0            0       0.0         0         0.0   11,943     13.2
Moderate-income         13        12.5       10,740      11.9     1,680        15.6   15,062     16.6
Middle-income           56        53.8       47,244      52.2     1,636         3.5   21,151     23.4
Upper-income            35        33.7       32,501      35.9       442         1.4   42,329     46.8
Total Assessment
                       104       100.0       90,485     100.0     3,758         4.2   90,485   100.0
Area
                    Housing                            Housing Types by Tract
                    Units by
                                       Owner-occupied                Rental             Vacant
                     Tract
                                   #         % by       % by        #           %       #        %
                                             tract      unit
Low-income                0           0        0.0        0.0          0        0.0       0      0.0
Moderate-income      19,136       9,411       10.2       49.2      8,571       44.8   1,154      6.0
Middle-income        81,854      48,774       52.7       59.6     29,358       35.9   3,722      4.5
Upper-income         43,048      34,437       37.2       80.0      7,035       16.3   1,576      3.7
Total Assessment
                    144,038      92,622      100.0       64.3     44,964       31.2   6,452      4.5
Area
                                                  Businesses by Tract & Revenue Size
                    Total Businesses by
                           Tract            Less Than or =                    Revenue Not
                                                            Over $1 Million
                                              $1 Million                        Reported
                        #          %           #          %          #          %       #       %
Low-income                 0       0.0          0          0.0         0        0.0      0      0.0
Moderate-income        1,203       8.9      1,006          8.8       164        9.7     33      8.7
Middle-income          7,894      58.5      6,566         57.5     1,113       65.5    215     56.9
Upper-income           4,407      32.6      3,856         33.7       421       24.8    130     34.4
Unknown-income             0       0.0          0          0.0         0        0.0      0      0.0
Total Assessment
                      13,504     100.0      11,428       100.0     1,698      100.0    378     100.0
Area
                    Percentage of Total Businesses:       84.6                 12.6              2.8



CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA

Loan-to-Deposit Ratio

Based on First Westroads Bank’s size , financial condition, and competitive factors and the
assessment area’s credit needs, the bank’s net average LTD ratio is considered reasonable.
Over the past 16 quarters, First Westroads Bank net LTD ratio averaged 84 percent. This
average LTD was compared with that of six other’s financial institutions of similar asset sizes
and operations within Douglas County. This peer group also had an average LTD ratio over



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                                                                                  First Westroads Bank
                                                                                          April 11, 2005


the past 16 quarters of 84 percent. Therefore, First Westroads Bank meets the standard for a
satisfactory performance rating under this test.


SUMMARY OF LENDING PERFORMANCE


                                             TABLE 3
                           FIRST WESTROADS BANK’S LENDING PERFORMANCE

Assessment Area
                                               Inside                                Outside
Distribution
                                 #       %         $(‘000s)      %       #          %            $(‘000s)     %
  Small Business                 28     76.8        5,108       64.1     13        23.2           2,866      35.9
  Home Equity                    43     87.5        1,975       85.5      4        12.5              335     14.5
  TOTAL                          71     80.7        7,083       68.9     17        19.3           3,201      31.1
Geographic Distribution
                                        % Bank Loans                           % of Small Businesses


                                Low   Moderate         Middle   Upper   Low      Moderate         Middle    Upper
   Small Business                0      11.6            53.5     34.9    0         8.9             58.5      32.6
                                        % Bank Loans                       % of Owner Occupied Units
                                Low   Moderate         Middle   Upper   Low      Moderate         Middle    Upper
  Home Equity                    0       0              32.1     67.9    0         10.1            52.7      37.2
Borrower’s Distribution                 % Bank Loans                           % of Small Businesses
Small Businesses with Gross
Revenues Less than One                          79.1                                      84.6
Million
                                        % Bank Loans                               % of Families

                                Low   Moderate         Middle   Upper   Low     Moderate         Middle     Upper
Income Level of Borrower         0      14.3            10.7     75.0   13.2      16.6            23.4       46.8


Lending in the Bank’s Assessment Area

As indicated in Table 3, a majority of the bank’s small business and home equity loans are
originated inside the assessment area. Of the loans originated outside of the assessment
area, most are to borrowers located in neighboring Sarpy County. First Westroads Bank’s
president formerly worked for a financial institution in Sarpy County, and many of these
customers now transferred their business to First Westroads Bank. The bank’s record of
lending within its assessment area is therefore considered satisfactory.

Geographic Distribution of Loans

Within this performance test, the bank’s distribution of business loans among geographies of
various income levels is compared to the percentage of small businesses located in each of
these geographies. Similarly the bank’s distribution of home equity loans is compared to the

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                                                                          First Westroads Bank
                                                                                  April 11, 2005


percentage of owner-occupied units located in the geographies of each income level, with
emphasis on low- and moderate-income tracts.

Business Loans

                         h
According to Table 3, t e bank’s level of business lending in the moderate -income census
tracts compares similarly to the percentage of small businesses located in these tracts. As a
result, the distribution of loans, especially to low- and moderate-income geographies is
reasonable.

Home Equity Loans

As illustrated in Table 3, the bank did not originate any sampled home equity loans in the
moderate-income tracts. Demographic information on the bank’s assessment area indicates
that 50 percent of the families residing in the moderate -income tracts are low- and moderate-
income families. In addition, 16 percent of the area’s families are below poverty level. These
demographics infer that many of the residents within the moderate -income tracts are financially
unable to obtain home equity loans and that the demand for these types of loans is low.
Therefore, the bank’s level of home equity lending in the moderate-income tracts is
acceptable.

Lending to Businesses of Different Sizes and Borrowers of Different Income Levels

This lending test focuses on the bank’s level of lending to small businesses, which are those
businesses with gross annual revenues less than $1,000,000. The test also focuses on the
percentage of loans originated to borrowers of different income levels compared to the
percentage of families of various income levels, especially those with low- and moderate-
means.

Business Loans

Table 3 illustrates First Westroads Bank’s level of lending to small businesses. Although a
majority of the bank’s loans were originated to small businesses, the percentage of loans
made to smaller businesses compares slightly lower than the demographic percentage. The
bank is located in close proximity to several medical facilities and as a result, has a significant
number of bank customers who operate health care-related businesses. Of the loans
originated to borrowers with revenues in excess of $1,000,000, most are to these health care-
related businesses. Overall, the bank’s level of lending to small businesses is considered
satisfactory.

Home Equity Loans

As shown in Table 3, First Westroads Bank originated 14 percent of its home equity loans to
moderate-income borrowers while 30 percent of the assessment area’s families are
designated as low- and moderate -income. As stated previously, low- and moderate -income
families often do not have the financial capacity and resources to purchase real estate and

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                                                                       First Westroads Bank
                                                                               April 11, 2005


therefore, many of these families do not have a need for home equity loans. Nonetheless, the
bank was able to originate several home equity loans to moderate-income borrowers.
Therefore, the bank’s performance is considered satisfactory.

Other Considerations

The bank participates in guaranteed loan programs offered through the Small Business
Administration (SBA). These loan programs are most often utilized by First Westroads Bank
when originating loans to start-up businesses. Since the previous CRA evaluation, First
Westroads Bank originated 23 SBA loans. Participation in these programs demonstrates the
bank’s willingness to lend to small businesses, especially those with limited resources.

Record of Responding to Complaints

The bank has not received any complaints about its performance in meeting assessment area
credit needs. Therefore, the bank’s performance in responding to complaints was not
assessed.


COMPLIANCE WITH ANTIDISCRIMINATION LAWS

An evaluation of the bank’s fair lending activities was conducted during the examination to
determine compliance with the broad, nondiscriminatory provisions of the Equal Credit
Opportunity Act. The Federal Financial Institutions Examination Council (FFIEC) Interagency
Fair Lending Examination Procedures were used for the analysis. No violations of the
substantive provisions of the antidiscrimination laws and regulations were identified. Overall,
effective policies, procedures, and training programs have been developed to support
nondiscrimination in lending activities. Further, the bank is not engaged in other illegal
practices inconsistent with helping to meet the community’s credit needs.




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                                                                                    First Westroads Bank
                                                                                            April 11, 2005


                              GLOSSARY OF COMMON CRA TERMS
      (For additional information, please see the Definitions section of Regulation BB at 12 CFR 228.12.)


Assessment Area – The geographic area(s) delineated by the bank and used in evaluating
the bank’s record of helping to meet the credit needs of its community. The assessment area
must include the geographies where the main office, branches, and deposit-taking automated
tellers machines are located. The assessment area must consist only of whole geographies,
may not reflect illegal discrimination, and may not arbitrarily exclude low- or moderate -income
geographies.

Census Tracts – Census tracts are small, relatively permanent geographic entities within
counties delineated by a committee of local data users. Generally, census tracts have
between 2,500 and 8,000 residents and boundaries that follow visible features.

Community Development – Includes affordable housing (including multifamily rental housing)
for low- and moderate-income individuals, community services targeted to low- and moderate-
income individuals, activities that promote economic development by financing businesses or
farms that have gross annual revenues of $1 million or less, or activities that revitalize or
stabilize low- or moderate -income geographies.

Community Development Loan – A loan that has community development as its primary
purpose and (except in the case of a wholesale or limited-purpose bank).

   1. Has not been reported or collected by the bank or an affiliate as a home mortgage,
      small business, small farm, or consumer loan, unless it is a multifamily dwelling loan
      and
   2. Benefits the bank’s assessment area(s) or a broader statewide or regional area that
      includes the bank’s assessment area(s).

Community Development Service – A service that has as its primary purpose community
development, is related to the provision of financial services, has not been considered in the
evaluation of the bank’s retail banking services, benefits the banks assessment area(s) or a
broader statewide or regional area that includes the bank’s assessment area and has not been
claimed by other affiliated institutions.

Consumer Loans – Loans to individuals for household, family and other personal
expenditures. These loans do not include real estate-secured loans.

Dun & Bradstreet Data – Data collected by Dun & Bradstreet regarding types of businesses
and their respective gross annual revenues. The data can be sorted by geographies.

Geography – A census tract or a block numbering area.




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                                                                        First Westroads Bank
                                                                                April 11, 2005


Income Level – Both geographies and individuals can be described in terms of their income
levels. In MSAs, the level is based on the MSA median income. In nonMSA areas, the level is
based on the statewide, nonMSA median income.

      Low-Income – Less than 50 percent of the area median income

      Moderate-Income – At least 50 percent and less than 80 percent of the area median
      income

      Middle-Income – At least 80 percent and less than 120 percent of the area median
      income

      Upper-Income – At least 120 percent or more of the area median income

Metropolitan Statistical Area (MSA) – The general concept of an MSA is that of a core area
containing a large population nucleus, together with adjacent communities having a high
degree of economic and social integration with that core. Generally, a single city with at least
50,000 inhabitants or an urbanized area with a total population of at least 100,000 would meet
the definition of an MSA.

Qualified Investment – A lawful investment, deposit, membership share or grant that has as
its primary purpose community development.

Small Business – A business with gross annual revenues of $1 million or less.

Small Business Loan – A loan with an original amount of $1 million or less that has been
reported in the Consolidated Report of Condition and Income in the category “Loans secured
by nonfarm nonresidential properties” or “Commercial and industrial loans.”




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