Regulators have strengthened an order against Second Federal Savings and Loan in Chicago, directing the $251 million-asset thrift to hold more capital than usually expected of institutions.
In an amended order dated Oct. 13, the Office of Thrift Supervision said Second Federal must immediately have a leverage ratio of at least 7% and Tier 1 risk-based capital ratio of at least 11%. These targets are higher than the usual thresholds for being considered well capitalized (5% for the leverage ratio and 6% for Tier 1 risk-based capital).
By next March 31, the amended order says, the thrift must increase its leverage ratio to 8% and the total risk-based capital ratio to 12%.
On June 30, Second Federal's leverage ratio was 8.02%, and its Tier 1 risk-based capital ratio was 11.21%.
If Second Federal fails to comply with the amended order, it would then have 15 days to craft a plan for selling or liquidating itself.
The original March 23 order told the thrift to "address the adequacy" of its capital ratios but set no specific targets.
