All but one Northern Colorado bank posted profits for the second quarter ended June 30, 1995, and a substantial number have left the benchmark 1 percent return on assets in the dust, according to data provided by the Federal Reserve Board and Veribanc Inc.

First Community Industrial Bank in Fort Collins was the top earner for the quarter, posting a 3.56 percent ROA. Farmers Bank of Eaton recorded 2.30 percent, and Loveland’s Home State Bank rang in at 2.83 percent.

“Banking in general in the state is very good, but it is particularly good in Northern Colorado,´ said Jim Dillon, Colorado’s chief deputy bank commissioner.

A 30-year veteran of the industry, Dillon said “the last couple of years have been as good as I can remember.

“Earnings in banks are really good. It used to be kind of a rule of thumb that if ROA was 1 percent or a little higher, things were really good. Now banks are approaching 2 percent and over.”

Dillon attributed the boost in profitability to independent banks’ moves to find a competitive niche in the face of expanding branch banking. He said some have moved into income-generating markets, including secured-fee and merchant credit-card operations, or now sell their mortgages to a secondary market to generate fees, for example.

“Community banks can’t compete with the big-money-center banks, so they need to find a niche,” Dillon said.

Because banking is reflective of the economy, Dillon said he remains cautiously optimistic in his outlook for the industry.

“I am not concerned, but we are always waiting for the next downturn,” Dillon said.

“I don’t think we would see anything like in the ’80s again, perhaps even in my lifetime. But we had a number of banks close then, and we all learned a lesson to where we’re kind of looking for those things now.”