FDIC cites Loveland bank

LOVELAND - The Federal Deposit Insurance Corporation has cited a Loveland bank for using unsafe and unsound banking practices.

In a FridayNov. 27 announcement, the FDIC named Advantage Bank, 1475 Denver Ave., among 86 banks from across the country that received administrative enforcement actions in October.

Advantage Bank has branches in Loveland, Greeley, Fort Collins and Boulder.

On Oct. 19, Advantage Bank accepted a FDIC Cease and Desist Order, stipulating the bank must stop practices ranging from operating with inadequate liquidity to engaging in inadequate lending and collection practices and operating with inadequate earnings.

In a statement released by Advantage Bank, officials said the bank has experienced issues with its loan portfolio due to today's economic climate.

"The economic downturn has had an unfortunate affect on many of our customers, however, we recognized these issues well in advance of the agreement and have been addressing them over the past year," Advantage Bank CEO Tom Chinnock said. "We have made a great deal of progress."

As of Sept. 30, 2009, Advantage Bank had about $450 million in assets and has worked to be in compliance with the FDIC's agreement, Chinnock said.

"The bank is in a strong position to weather these uncertain economic times," he said. "We have a strong balance sheet, significant reserves for potential loan losses and we're well capitalized."

LaJuan Williams-Dickerson, a FDIC spokesperson, said a Cease and Desist order does not mean a bank is heading toward failure.

Instead, it's an opportunity for officials to look at what's going on at the bank and address how to correct issues, Williams-Dickerson said.

A similar order was issued to Greeley's New Frontier Bank last year.

New Frontier had branches in Windsor, Fort Collins and Longmont and was one of 15 banks across the country to receive a Cease and Desist order in December 2008.

On April 10, the state bank commissioner closed the business.

In the case of New Frontier Bank, a review conducted by the Office of Inspector General for the FDIC said federal bank regulators repeatedly warned the bank dating back to 2004 about risky loans it could not cover.

In addressing issues at Loveland's Advantage Bank, the FDIC has ordered bank leaders to meet a series of improvement benchmarks, like maintaining minimum capital levels, revising a written program for loan reviews and no longer extending credit to borrowers who have loans that have been charged off.

Windsor's Signature Bank also is facing similar requirements by the FDIC, bank president and CEO Bob Hinderaker said Friday.

Hinderaker said similar disciplinary actions were brought against his bank but the business is stable and far from the trouble New Frontier Bank faced.

Since the Cease and Desist orders were issued to the banks, the FDIC has changed the name of such regulatory agreements.

They are now called Consent Orders, to reflect agreement reached on corrective plans by banks and regulators.