Academic journal article ABA Banking Journal

Colorado Federal Savings: Mortgage Bank in Thrift's Clothing

Academic journal article ABA Banking Journal

Colorado Federal Savings: Mortgage Bank in Thrift's Clothing

Article excerpt

For most banks, a reduction in their efficiency ratio from 744% to 89% would be cause for celebration, but at the $43 million-asset money machine known as Colorado Federal Savings Bank, Greenwood Village, Colo., president Patrick Dalrymple hadn't really noticed it. He doesn't pay much attention to that ratio because his company's structure is so different from the norm, even though it has a federal savings bank charter.

CFSB operates much more like a mortgage bank than a traditional thrift. It relies on a network of "net branches"--loan production offices, basically--in eight states. These net branches operate in principle like franchises and result in a large number of employees for the bank's asset size, which balloons the efficiency ratio. In reality, however, the company is highly profitable, as evidenced by its 41.68% return on average equity, making it the second most profitable non S-corp bank under $100 million in assets.

Colorado Federal funds loans almost exclusively with short-term jumbo CDs that it sells to a stable of regular investors. …

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