A "critically undercapitalized" thrift in Colorado has been slapped with an enforcement order that prohibits it from paying dividends, accepting brokered deposits, or paying bonuses to its executives without approval from the Office of Thrift Supervision.
The rare "prompt corrective action" directive also requires Colorado Federal Savings Bank in Greenwood to abide by the amended capital restoration plan it submitted to the OTS on May 30.
At March 31, the 18-year-old thrift had a Tier 1 capital ratio of 1.96% and a total risk-based capital ratio of 2.67%, according to the Federal Deposit Insurance Corp.
Under the order issued June 27, the $45 million-asset thrift cannot make any capital distribution without OTS approval and cannot increase its assets or acquire another bank or branch or enter a new line of business unless the action is consistent with the capital restoration plan.
Moreover, the thrift cannot accept, renew, or roll over any brokered deposit; make any payment on its subordinated debt; or increase executives' salaries above the average amounts they were paid before Colorado Federal became undercapitalized, without prior OTS approval.
In March, the OTS imposed a cease-and-desist order on Colorado Federal, requiring it to submit a plan for raising capital and reducing classified assets, among other things. This order remains in effect under the new directive.
In the first quarter, the thrift lost $2.7 million, compared to a loss of $666,000 a year earlier. Its net chargeoffs to total loans topped 10%, and more than 5% of its loans were delinquent.