The Office of Thrift Supervision has ordered Home Federal Savings Bank in Detroit to sell itself.
According to a prompt corrective action issued last week, Home Federal must submit a binding acquisition agreement to the agency by April 15, unless the deadline is extended.
The sale must close by June 30 and make Home Federal at least adequately capitalized by regulatory standards.
The $15 million-asset thrift also must provide monthly updates to the OTS about its efforts to find a buyer.
The agency warned that it might take further action if it decides Home Federal is failing to make adequate progress.
The OTS said the thrift initially had been notified Nov. 22 that it was undercapitalized, and that it had to submit a capital restoration plan by Jan. 5. However, the agency said Home Federal did not submit a plan.
For the fourth quarter, the thrift posted a $100,000 loss, its 11th in as many quarters, according to data from the Federal Deposit Insurance Corp.
The losses have eaten into its capital, causing its ratios to fall below the levels regulators consider well capitalized. At yearend its core capital ratio was 3.87%, and its total risk-based capital ratio was 9.82%, the FDIC data indicated.
The prompt corrective action requires Home Federal to monitor its capital ratios closely and to notify the OTS of any event that might result in a decline.
The directive puts restrictions on Home Federal's asset growth, the interest rates it pays on deposits and the sale of securities. It also prohibits paying executive bonuses, among other things.
Home Federal has been contending with an increase in problem assets lately. Its noncurrent assets plus other real estate owned rose to 4.14% of total assets at yearend, from 0.83% a year earlier.
The OTS said previous cease-and-desist orders issued in July 2004 and October 2007 remain in effect, as does a supervisory agreement from April 2007.