The U.S. District Court for the District of Columbia has sided with regulators in the decision to shutter a Denver bank in 2011.

District Judge Amy Berman Jackson on Tuesday issued a 40-page opinion on the case involving United Western Bank and the Office of the Comptroller of the Currency, which took over the case when it absorbed the Office of Thrift Supervision in 2011.

Executives of the $2 billion-asset bank have said since the night that the institution was seized in January 2011 that regulators acted in an arbitrary and capricious manner in closing the bank. They wanted the failure to be reversed. Since the bank's assets and deposits are now held by First Citizens BancShares (FCNCA) in Raleigh, N.C., some sort of settlement was the perceived outcome had Jackson sided with the bank.

The OCC and the bank executives have been awaiting the judge's decision since June.

United Western argued that the OTS and the Federal Deposit Insurance Corp. had begun discussing the bank's failure in June 2010, when the bank stressed but not undercapitalized.

United Western had problems with a book of private-label mortgage-backed securities, but regulators also had concerns with a deposit structure that was largely comprised of relationships with companies such as clearing services firms and trust companies. The bank's management had argued that regulators had long been fine with the relationship, but had unceremoniously changed their minds.

United Western's executives also claimed that they had $200 million of capital commitments in the days prior to the bank's failure, but regulators were unmoved.

Jackson, however, said in her ruling that the bank failed to show the OTS's decision was arbitrary or capricious in denying its motion.

"After one strips away all of the hyperbole about the agency's 'sudden' change of heart, the Bank's fundamental grievance is that if only the agency had just given it a little more time, it would have been able to come up with the necessary capital to save the day," she wrote. "Maybe."

Jackson also wrote in her opinion that the recapitalization plan was dependent on unlikely regulatory changes and that potential investors had numerous contingencies. The officers and directors were serious in their efforts, she says.

"Whether the court accepts the bank's assessment of its prospects wholeheartedly or with reservations is beside the point," Jackson writes. "The Court cannot find that the agency's decision was unreasonable under all of the circumstances at the time it was made, or that it was not supported by the administrative record."

The OCC did not immediately respond to a call. The bank executives are disappointed and evaluating the advisability of an appeal, said Samuel J. Buffone, a partner at BuckleySandler. Buffone also said in a statement that the court often sides with the regulators, but the "OTS's misuse of its powers to seize a viable financial institution is not entitled to deference."

"It is important that bank regulators be more careful than the OTS was in this case in exercising their vast powers to seize a bank from its shareholders," Buffone wrote in an email. "Given the court's expansive view of the deference required by current law, it may be time for Congress to reconsider the current legal standard, as interpreted by the courts, which gives broad powers to bank regulators to seize a bank with no meaningful opportunity for judicial review."

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