R. Craig Pica, the chief executive officer of Provident Funding Associates LP, a large wholesale mortgage lender in Burlingame, Calif., has filed an application with the Office of Thrift Supervision to purchase the $44.6 million-asset Colorado Federal Savings Bank in Greenwood.
James Hinton, the president of Colorado Federal, said in an interview last week that Mr. Pica plans to "aggressively grow" the thrift's mortgage business, which originated roughly $600 million of residential loans last year.
The purchase will be "a personal investment" for Mr. Pica, and there is "no intent to merge the two companies," Mr. Hinton said.
Mr. Pica did not return calls seeking comment by press time. Mr. Hinton said Colorado Federal shareholders have voted to sell their stock to Mr. Pica; a notice of the application appeared May 20 in The Denver Post.
Colorado Federal's Tier 1 risk-based capital ratio plummeted from 11.39% on Dec. 31 to 1.96% on March 31, according to the Federal Deposit Insurance Corp. Its total Tier 1 capital base shrank 84%, to $489,000. (The ratio for all savings institutions with less than $100 million of assets slipped 45 basis points over that period, at 28.29%.)
The thrift posted a net loss of $2.7 million for the first quarter, more than four times the loss it reported a year earlier. Assets in nonaccrual status also more than quadrupled, to $1.7 million.
At the end of the first quarter Colorado Federal held $3 million of real estate acquired through foreclosure, nearly double what it had at yearend. (It had no such assets a year earlier.)
Last quarter it posted negative returns of 24.16% on assets and 588.6% on equity, compared with positive returns of 1.3% on assets and 7.66% on equity for thrifts its size.
Mr. Hinton did not return follow-up calls about the thrift's performance by press time.
Joe Garrett, a principal of the San Francisco mortgage consulting company Garrett, Watts & Co., said that he expects more lenders to take a stab at acquiring federally regulated banks or thrifts.
"This is what everybody would like to do, but only about 1 in 100 would qualify, because the regulators aren't just going to let anyone come in and run a regulated thrift," he said.
Mr. Pica, whose company has earned a reputation as a low-cost lender with superior technology, "may be among the very few that could pull it off."
Mr. Garrett said that "while being regulated has its moments, it's worth every single bit of aggravation."
