Solera National Bancorp in Lakewood, Colo., has been released from its formal agreement with the Office of the Comptroller of the Currency.
The 2014 agreement required the $156 million-asset company to develop a three-year capital and strategic plan, strengthen credit underwriting and upgrade information-technology systems. The order also blocked the company from paying dividends without regulatory approval.
Compliance was a challenge for the bank, which has just 21 employees, said Martin May, Solera’s president and CEO.
“There were a lot of fees, plus the extra work of keeping up with the reports,” May said. “It’s like sand in a machine. It just slows everybody down.”
Solera had examinations twice a year as it dealt with the order. Those reviews will now take place every 18 months.
For now, May said he will work hard to build core deposits at Solera, which had historically relied on high-cost CDs for much of its funding.
“We need to become a real bank,” May said. “You don’t need a charter to be a lender. Why go through all the trouble of complying with regulations if you’re not going to use your charter to gather low-cost deposits?”
May, when he was hired in December 2015, became the company’s sixth CEO in seven years.
Solera for much of 2014 was embroiled in an internal battle that pitted former management against Michael Quagliano, the company’s biggest investor. A coalition led by Quagliano, which won control of the board that year, quickly ousted John Carmichael.
Quagliano is the company’s chairman.
Carmichael later filed a lawsuit against Solera. A jury awarded the former CEO $427,000 in severance pay last fall.
With the formal agreement behind it, Solera, which focuses on serving Denver’s Hispanic community, appears to have bounced back fully from years of turmoil. It has reported nine straight profitable quarters after reporting losses totaling $1.1 million in 2013 and 2014.
Solera’s $2.1 million profit for the fourth quarter included the reversal of its deferred-tax asset.