New owners have quietly taken over Colorado’s most troubled bank after federal regulators threatened to seize it.
Greenwood Village-based Colorado Federal Savings Bank has struggled with one of the highest ratios of nonperforming assets in the country.
More than 10 percent of its loans, which consisted primarily of risky mortgages, were seriously delinquent in the first quarter.
The Office of Thrift Supervision at the end of March gave the bank’s previous management team under president James Hinton three months to find a buyer or raise more capital.
A new ownership group arranged a quick sale that closed June 29, a day before the regulators had threatened to seize control.
“They were going to lose the thrift, and the government was going to take over,” said Randy Ilich, the bank’s new president and chief executive. “Two months was fast to get a transaction done.”
The new owners have contributed more than $100 million in assets and $10 million in capital to put the bank on solid footing, Ilich said.
They are also selling off problem loans and focusing on more conservative mortgages. He estimates the private takeover has saved taxpayers $30 million.
Ilich declined to name the new owners or where they are from but said they are experienced mortgage lenders.
National Mortgage News reported in May that Provident Funding Associates of Burlingame, Calif., which it described as one of the best-managed mortgage lenders in the country, was pursuing Colorado Federal. Ilich worked for Provident before taking his new position.
Colorado Federal, started in 1990, lent primarily through mortgage brokers and took deposits from institutional investors.
Ilich said the new owners will focus on making the savings bank more like a traditional thrift that raises deposits from retail customers.
Research Associates of America, in a report prepared for ABC News on Tuesday, ranked Colorado Federal as the most likely bank to fail in the country.
Ilich said the new capital infusion will remove the savings bank from the troubled list.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
