Advantage Bank improving, other banks looking up in Q1

After a long and tortured road, Advantage Bank is showing signs of recovery.

Northern Colorado’s last “troubled” bank is raising capital and getting healthier quarter-by-quarter. A branch sale in April and a capital campaign launched in November have both boosted some of the most important indicators of a bank’s health.

The sale of the Boulder branch of Advantage to Citywide Banks closed in April, according to Advantage CEO Tom Chinnock.

The sale reduced the bank’s asset base by approximately $50 million, but trimming operations was a better tactic than holding onto the branch since its sale brought money in.

Loveland-based Advantage now has three branches, all located in Northern Colorado.

The capital campaign, meanwhile, raised $3.5 million through March 31, and Chinnock said he believes that even more will be brought in as the year progresses.

“The campaign is ongoing and I am optimistic that additional capital will be raised this quarter and next,” he said.

The campaign involves a stock offering to shareholders of the bank’s holding company, Advantage Bancorp Inc. Terms of the stock offering were not disclosed because the company is privately held.

Financial services veteran and Northern Colorado native Bud Noffsinger was brought on board at Advantage as a senior officer at the same time the stock offering was made, investing personally in the bank and working to entice others to do the same.

While the bank’s capital ratios are still down from the same period last year, Advantage showed a quarterly increase in all three ratios watched closest by regulators.

According to the bank’s call report, its Tier 1 leverage capital was 5.04 percent, Tier 1 risk-based capital was 6.96 percent, and total risk-based capital was 8.23 percent. All of these numbers surpass what regulators consider “adequate,” and two of the three meet the standard for “well” capitalized.

Given the branch sale and its other issues, lending is not surprisingly down at the bank, from $255 million in the first quarter of 2011 to $230 million in the same period of 2012. Loan dollars decreased in three of the four major types of loans, with a 43-percent increase in agricultural lending year-over-year.

In total, the bank shows assets of $340 million.

Advantage, like so many other Northern Colorado banks, was a victim of the recession, with an abundance of commercial real estate loans on its books when the market declined. In the fall of 2009, commercial real estate loans accounted for 70 percent of Advantage’s loan portfolio.

Advantage was placed under a consent decree by the FDIC in October of that year and was directed to improve its capital ratios. Since then, the folks at Advantage have been working to do just that. And little by little, it seems to be working.

In addition to the efforts it has made, Advantage is being helped along by a relatively friendlier banking economy in general.

It has been more than a year since the last time a Northern Colorado bank was placed under a consent order by regulators, and nearly a year has passed since the last time a Northern Colorado bank has been closed by regulators and sold to another institution.

The last time this occurred was the acquisition of Bank of Choice in July 2011 by National Bank Holdings Corp. after Bank of Choice was declared insolvent by regulators.

Banks that do business in Northern Colorado are looking better as a group, at least according to their Tier 1 leverage capital ratios.

Nine of 14 banks analyzed saw increases in their ratios year-over-year, and those that decreased did so by less than a full percentage point.

Nationwide, the outlook is improving for banks, however slowly. The number of “problem” institutions declined from 813 to 772, the smallest number of problem banks since year-end 2009.

Nationally, 16 insured institutions failed during the first quarter, the smallest number of failures in a quarter since the fourth quarter of 2008, when there were 12.

As a result of fewer banks failing, the FDIC’s insurance fund is also looking better. The deposit insurance fund balance rose to $15.3 billion as of March 31 compared to $11.8 billion at the end of 2011.

And as the situation improves, local banks are beginning to lend again.

Molly Armbrister covers banking for the Northern Colorado Business Report. She can be reached at or 970-232-313.

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Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, or

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