With dwindling capital and a plan to buy an ancillary business, United Western Bancorp Inc.'s capital-raising plans are of particular importance to analysts following the company.
During the Denver company's second-quarter conference call last week, Ed Timmons, an analyst at Sterne Agee & Leach, grilled the company on that issue.
"If you have interested parties … what is the delay here?" Timmons said. "Why have these parties not stepped up and recapped the bank?"
Guy Gibson, chairman and chief executive of the $2.42 billion-asset company, said efforts to raise capital are in the works, though the company is trying to find an appropriate suitor for its adequately capitalized thrift.
"It is not that we have all the time in the world to do something, but we are prudently trying to find the right partner," Gibson said.
Earlier in the call, Gibson said that in addition to discussions with equity partners, United Western is "evaluating whole-bank acquisition transactions by entities which have approved banking charters and can result in the purchase of the company or the bank."
The $2.42 billion-asset company last week reported that its loss narrowed by 45% from a year earlier and 28% from the first quarter, to $18.8 million. The narrower loss was a result of a 25% lower loan-loss provision, to $4.7 million, from a year earlier. However, for a fifth straight quarter the company's results were affected by other-than-temporary impairment charges on its mortgage-backed securities portfolio. In its second-quarter results United Western reported $11.6 million in such charges.
The hits to the securities portfolio have left the United Western Bank unit adequately capitalized, with a total risk-based capital ratio of 9.02%.
At 7.42%, its leverage ratio is considered strong, though a June order from the Office of Thrift Supervision called for the thrift to boost its leverage ratio to 8% and its total risk-based capital ratio to 12%.
In an unusual move, the company announced in June that it was buying Legent Clearing LLC for $15 million. At the time, Gibson said it hoped the purchase would improve the funding base and would make it easier to raise capital. Analysts were dubious about the deal and now say it is unlikely to close unless United Western first raises capital.
Adding to the need for cash is a $14.25 million line of credit from JPMorgan Chase that comes due in September, an extension from its May deadline. United Western received the extension on the condition it would make monthly payments of $500,000 in the interim. Yet the terms of its order with the OTS prevent such payments without approval, which it said it has sought.
