Essex Bancorp, a Virginia thrift holding company struggling to survive, said it suffered a $1.6 million loss in the first quarter.
If Essex, the parent of Essex Savings Bank, does not raise $15 million by the end of the second quarter, the company could fall into receivership or be subject to other enforcement actions, the company said in a press release.
"Although Bancorp continues to have ongoing meetings and discussions with potential investors, firm commitments from any of these potential investors have not yet been received," the company said. "(I)t is imperative that Bancorp continue to aggressively pursue opportunities to raise additional capital."
The deficit is slightly more than twice as large as the loss the Virginia Beach-based company had in the year-earlier quarter.
Gene D. Ross, the company's chief executive hired three years ago to rescue the troubled company, could not be reached for comment.
The continued operating losses were attributed primarily to a slowdown in mortgage banking, high loan-loss provisions, and regulatory restrictions preventing it from increasing assets, a company press release said.
The regulatory restrictions stem from the $293 million-asset company's capital problems. The Office of Thrift Supervision has deemed the thrift "significantly undercapitalized."
After trying unsuccessfully last winter to raise about $12 million through a public offering, the company is now attempting to generate capital through a private placement, using preferred stock and warrants.
As of March 31, Essex's core and risk-based capital ratios were 2.93% and 6.28%, respectively, significantly below the minimum ratios of 4% and 8%, the company said. These shortfalls amount to a total of $3.1 million below minimum requirements. Three weeks ago, Essex filed a revised business plan and capital restoration plan with the OTS.
Essex, initially organized as a limited partnership to own thrifts located throughout the Southeast, has been buffeted by problems almost since its inception in 1989.
The company lost $4.4 million in the third quarter last year, from legal expenses associated with a lawsuit filed by the original investors in the company. That setback was just one of many difficulties that have hamstrung the company, including bad loans, fraud, and recession.
Mr. Ross has overhauled the company's structure, focusing the business within Virginia and North Carolina.
