Founded in 2007, just before the recession, Solera National Bank is coming out on top.
BY HEATHER DRAPER
DENVER BUSINESS JOURNAL

In hindsight, 2007 probably wasn’t the best year to start a community bank.

The U.S. financial sector melted down in 2008, and the nation sank into the worst recession since the Great Depression.

But hindsight is 20-20, and the founders of Lakewood-based Solera National Bancorp Inc. (OTCBB: SLRK), parent of Solera National Bank, have no regrets about opening their niche bank nearly five years ago.

The bank became profitable in its third year, and last year increased its earnings 80 percent from 2010, thanks to improving asset quality.

“Hopefully the economy has bottomed out,” said Doug Crichfield, Solera president and CEO. “But given what the world looked like a couple of years ago, Solera has done well. We have plenty of capital to finance our growth over the near term.”

Indeed, the bank had a total risk-based capital ratio of 20.5 percent as of Dec. 31. The Federal Deposit Insurance Corp. (FDIC) considers a bank “well capitalized” if it has a total risk- based capital ratio of 10 percent or more.

Solera opened at the southwest corner of West Alameda Avenue and South Sheridan Boulevard with a mission — to serve its community first and foremost, and the bank continues to operate with that focus in mind, Crichfield said.

“It was kind of an interesting approach to starting a new bank,” he said. “It was formed by about 20 organizers with the idea that we’d be welcoming to all people, especially focusing on the growing Hispanic community.”

The population within a three-mile radius of the bank is more than 50 percent Hispanic, Solera’s founders have said, and that population is more often “unbanked” or “underbanked” than their white peers.

An FDIC study in 2010 found that only 7.7 percent of American households were unbanked, but more than 19 percent of Hispanic homes didn’t have a checking or savings account.

Opening a bank targeting the Hispanic community had been the dream of a handful of local business leaders for several years, Solera Chairman Ron Montoya said.

Finding the right investors
When the bank founders — including Montoya, former board chairman James Perez Foster and CFO Bob Fenton — began looking for investors, they wanted shareholders who also would be bank customers.

Solera ultimately attracted about 750 investors who provided nearly $26 million to start the bank.

“We found out there was not only a huge need in the Hispanic community, but also in the Native American community, the African-American community, the Asian community, the female community,” Montoya said. “It’s always a challenge to find a bank that is sensitive to these small businesses. Minority small businesses have always had a tougher time [with banks].”

Solera hasn’t been able to grow as quickly as its founders would have liked because of the recession, but the bank’s executives have spent the last five years getting entrenched in the community they serve.

They have joined “all the ethnic chambers,” Montoya said, and market the bank through a variety of civic and cultural organizations in the metro area.

The bank hires bilingual tellers, offers financial literacy workshops, participates in Small Business Administration lending programs and works with the U.S. Department of Transportation to provide specialty loans for minority contractors.

Solera also provides accounts-receivable financing, which allows business owners to bridge the gap between bills due immediately and receivables that customers won’t remit for 30 days or more, Crichfield said.

The bank created the President’s Community Advisory Council with diverse members of the community to help Solera better support the Denver-area business community, facilitate access to private- and public-sector funding programs, and provide targeted financial and banking services.

“We want to be a community bank for the entire community, with specialties in certain areas,” Fenton said.

Now, like many community banks, Solera needs to increase its loan volume, Fenton said. “When you’re ready, we’re ready to lend,” he said.

Crichfield said as Solera’s business lending increases and asset quality continues to improve, he hopes to open branches in other parts of the metro area.

“Five years from now, we’d like a really strong community profile, a wider distribution system, and to continue to grow our product lines as we grow,” he said. “We really want to add value for both our customers and our shareholders.”

Reprinted for web use with permission from the Denver Business Journal. ©2012, all rights reserved. Reprinted by Scoop ReprintSource 1-800-767-3263.