Advantage Bank sale: South Dakota bank enters NoCo marketplace

LOVELAND — Sometimes a successful business venture is making the best of a bad situation, and challenging that appears to be the case in the pending sale of Loveland-based Advantage Bank to First National Bank of Pierre, South Dakota.

“I think it’s a good deal for all parties. It’s a great transaction,” said Larry Buckendorf, who co-owns Advantage Bancorp, along with partner Jeff Demaske. “Jeff and I are not bankers. We found ourselves in that position. It got a bit complicated, but the bank recovered very well with a lot of hard work and great management.”

With a finalization of the sale scheduled for August, both parties appear to be getting exactly what they hoped for, as the partners, who were first partners in Greeley’s Journey Homes, get out of the banking business having secured the viability of a community-based bank. First National’s regional president, Craig Davis, said the bank, owned by the Frank L. Farrar family since 1985, was also looking to expand its community banking philosophy in Colorado.

SPONSORED CONTENT

Select your Republic Services residential cart now!

In preparation for Republic Services becoming the primary provider of residential recycling, yard trimmings, and trash, residents should now select the best cart size and service schedule for their household needs.

“We’re excited to grow into Northern Colorado. Those have been good markets with steady population growth,” Craig said. “They are just good, strong, stable markets that we’re very interested in.”

First National has 15 banks in South Dakota and one in Centennial, Colorado. The family also owns First Saving Bank — headquartered in Beresford, South Dakota — with 26 offices located in South Dakota, Nebraska, Nevada, New Mexico, Texas, and Arizona

For Advantage Bank it’s been a rather wild ride since it came under FDIC scrutiny in 2009. Demaske called a $2 million note in 2014, which was backed by 5,000 bank shares, which led to him and Buckendorf owning the bank the following year. Since then, with a further $13 million in funding and a recovered economy, the bank has steadily strengthened, said Advantage Bank’s chairman and chief executive, John Nigh.

“It’s gone from a $277 million to a $320 million bank, and will be a $1.4 billion bank following the merger,” he said. “The bank’s deposits have grown from $225 million to $260 million. Loans have grown from $170 million to $268 million. When the bank was having challenges, we had a lot of deposits and not so many loans. As the bank’s performance improved, we changed that.”

Nigh said the partners made three key decisions to rescue the bank. They put money into the operation, they kept the money in the operation, and they took their loans out of Advantage Bank and went to other sources for their business loans. That final decision, “took a lot of pressure off the management when faced with the regulators,” he said.

Buckendorf credited his management team including Nigh, who has been chairman since the inception in 2000; President Jeff Kincaid; Tina Daniels, chief financial officer; Michael Lombardelli, chief credit officer; and Matthew Beck, Fort Collins branch president for much of the turnaround. Nigh and Daniels will be retiring, but aside from senior management, Davis said the new owners are committed to keeping the same staff to service existing customers.

“Some of the senior leadership will be retiring, but the core employment group will remain unchanged,” Davis said. “Our motto with this bank is: The same people, different owners.”

Like the partners who turned around Advantage, Davis said the family ownership in First National is committed to organic growth — that is keeping capital and profits in the banks. He noted it is very committed to community banking, which made the purchase an obvious win.

“As a family-oriented, community bank we like to care for the people who work for us,” he said. “We’re one of the most well-capitalized banks in the Western District, and we’re taking advantage of a very good acquisition opportunity.

“We’ve been in Colorado for 15 years, so we’re very familiar with the market.”