Federal regulators have given the struggling First Federal Bankshares Inc. in Sioux City, Iowa, until the end of September to raise the capital levels at its Vantus Bank unit.
The $503.5 million-asset company, whose capital was depleted by writedowns on pooled trust-preferred securities and loans to residential developers, said in a Securities and Exchange Commission filing Monday that it must submit a new recapitalization plan for Vantus to comply with a prompt corrective action directive from the Office of Thrift Supervision.
The order imposes a Sept. 30 deadline for Vantus to become at least adequately capitalized by selling itself or most of its assets. Otherwise, it faces seizure.
At the end of the second quarter, Vantus' total risk-based capital ratio was 3.98%, well below the 8% level considered adequate, according to data from the Federal Deposit Insurance Corp.
First Federal said the OTS considered a previously filed recapitalization plan unacceptable. The company, which has been trying to raise capital all year, filed the plan to comply with an earlier prompt corrective action directive.
First Federal also announced that it would promote Scott T. Sehnert to president and chief executive officer as of Sept. 25. Sehnert, who is the chief banking officer at Vantus, is to succeed Levon Mathews at the company's helm.
Mathews joined the company late last year but announced last month that he would leave for another job.