The Federal Deposit Insurance Corp. has warned that Castle Rock-based Colorado Capital Bank is “critically undercapitalized” and ordered the bank to take immediate action.
The FDIC decision, made public Friday, was issued in May and gives the bank 30 days to increase the capital to a level sufficient to restore the bank to “an adequately capitalized” situation.
The FDIC directive is called a “supervisory prompt corrective action directive.”
In the directive, the FDIC said it notified the bank’s board of directors of the bank’s undercapitalized position on Feb. 21 as a result of the capital ratios reported in the bank’s Dec. 31 call report. The FDIC told the bank to submit a Capital Restoration Plan with the agency by March 16.
The FDIC reported that on March 29, the plan was unacceptable and issued a “notice of intent to issue a supervisory prompt action directive.”
The bank responded to the notice on April 21.
The FDIC said the bank has since deteriorated to the point “that it is now critically undercapitalized.” As a result, the FDIC said it issued the directive.
The FDIC said the volume of capital can be increased by any number of means including the sale of common stock, the sale of noncumulative perpetual preferred stock and the direct contribution of cash by the board of directors and/or stockholders of the bank.
The FDIC specifically stated that the capital may not be accomplished through a deduction from the bank’s allowance for loan and lease losses.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com
