Companies often save the worst news for Fridays, and United Western Bancorp Inc. of Denver had plenty to choose from last week.
The $2.5 billion-asset company capped the week by announcing the immediate departure of Scot T. Wetzel, the chief executive and president of the company and of its thrift unit.
That was the crescendo. On Monday, United Western announced it was pushing back its annual meeting. At midweek it revealed a lawsuit against the issuers of several of its mortgage-backed securities alleging they misrepresented the underlying collateral. The previous week it had announced the long-anticipated retirement of its chief financial officer.
Analysts expect United Western in coming days to acknowledge it had a rough first quarter, even as it will likely try to persuade investors to pony up more capital.
"It has been one thing after the other for the last six to nine months with them," said Edward Timmons at Sterne Agee & Leach Inc. "There is likely a lot of pressure on them, both internally and externally, for a change. Confidence was lost."
Wetzel is departing a company that has been trying for the past year to get its arms around a troubled $286.5 million mortgage-backed securities portfolio.
"The board felt it needed a fresh view with regard to the marketplace and the bank's opportunities," Michael J. McCloskey, the executive vice president and chief operating officer, said in a brief interview. McCloskey would not comment further as United Western was expected to release first-quarter results Tuesday and host an investors' call Wednesday.
Guy A. Gibson, United Western's largest shareholder and its chairman, has assumed Wetzel's duties at the company level on an interim basis.
Wetzel said by e-mail that he was moving aside so Gibson could take over. "In consultation with the board of directors, it was mutually agreed upon that Gibson, as the founder of the company, was the best person to lead the organization forward at this stage of its evolution," he said.
Under a memorandum of understanding with the Office of Thrift Supervision, the United Western Bank unit has until June 30 to boost its leverage ratio to 8% and its total risk-based capital ratio to 12%. On Dec. 31 the ratios were 8.41% and 10.84%.
The company sold its trust division last year in a highly capital-accretive deal and raised $80 million of common equity in the third quarter of 2009. Timmons said United Western likely will have to go to the market again to hit its capital targets — he estimated it needs another $50 million.
Yet investors are wary. "A lot of the buyers in the September raise are not going to be involved this time around," Timmons said.
That souring view was fueled by a rough fourth quarter, for which the company reported a $40 million loss. Behind the loss was a $27 million other-than-temporary impairment charge on the mortgage-backed securities and an unanticipated uptick in problem loans. To make matters worse, Timmons said, the company didn't make clear how it planned to address the problems.
Wetzel joined United Western, then known as Matrix Bancorp Inc., in December 2005. The board gave him the task of turning the wholesale-funded mortgage lender into a community bank. Under Wetzel, it built up a strong branch network in the Denver area, said Wesley A. Brown, managing director of St. Charles Capital LLC, an investment bank in Denver.
"He did a good job at transforming the company," Brown said, "but this legacy MBS portfolio has just been looming over them."
