Ohio Legacy Corp. has lined up a lifesaving capital infusion.
The $186 million-asset Wooster company, which warned this spring that it might fail, announced Monday that it has agreed to sell a majority stake to Excel Financial LLC of St. Clairsville, Ohio, for $15 million.
Bruce A. Cassidy Sr., Excel's managing partner, said in a press release that his company would tap Rick Hull and Denise Penz to rebuild Ohio Legacy and establish a trust, investment and private banking business.
Cassidy did not provide details about their backgrounds, but said Hull would become the president and chief executive officer of Ohio Legacy and its bank unit after the deal's closing, which is expected near yearend.
"Excel's group of local investors and the seasoned banking professionals we have engaged have been interested in establishing a community banking presence in northeastern Ohio for some time," Cassidy said.
"With an invigorated balance sheet, and our management team in place, we look to position Legacy to take advantage of the opportunities the current banking landscape presents."
Excel could not be reached for further comment, and Ohio Legacy did not return a call by press time.
The deal calls for Ohio Legacy to issue 15 million shares of common stock to Excel for $1 each — or roughly seven times the number of shares it has outstanding.
Its shares mostly have been trading for less than $1 since mid-August.
They closed at 69 cents Monday, up two cents from Friday's close.
Ohio Legacy said in the press release that the investment would be enough to make its bank unit well capitalized again, but did not specify what the capital ratios would be.
Hammered by heavy losses on construction loans and investment securities, the bank unit has been low on capital for more than a year.
It received a cease-and-desist order from the Office of the Comptroller of the Currency in February giving it until Aug. 31 to get to a leverage ratio of 8.75% and a total risk-based capital ratio of 13.25%, levels above the typical minimums required to be well capitalized.
It acknowledged missing this deadline in filing its second-quarter results with the Securities and Exchange Commission, saying it would have needed about $8.2 million of additional capital to get the ratios to the required levels at the time.
Ohio Legacy did not make clear in its press release Monday if the $15 million would boost the bank unit's capital ratios to the elevated levels regulators imposed, but called the investment "an important step" in satisfying the order.
The company, which has yet to release results for the third quarter, lost $976,888 in the second quarter.
Noncurrent loans made up 7.77% of the bank unit's total loans at June 30, despite chargeoffs totaling 3.67% of its loans, according to data from the Federal Deposit Insurance Corp.