Peoples Community Bancorp Inc. in West Chester, Ohio, is in a do-or-die situation.
Now critically undercapitalized, it aims to sell branches to comply with newly imposed regulatory requirements. But if its plan fails, "the company will not be able to continue as a going concern," it said in a Securities and Exchange Commission filing on Friday.
Peoples' thrift unit had a ratio of tangible equity to tangible assets of 1.81% at March 31, according to the filing. Falling below the 2% mark triggered a tougher stance by the Office of Thrift Supervision.
An amended cease-and-desist order, which took effect April 29, requires the thrift to demonstrate that it can return to adequately capitalized status by June 15.
Peoples said a capital plan it submitted to the OTS the next day noted that it is in talks to sell some branches. The sale could reduce its assets and liabilities, generate a deposit premium and restore it to adequately capitalized status.
But it cannot be certain that the OTS will accept the plan or that the sale will be completed — and success on both fronts is necessary for it to survive.
If it clears those hurdles, Peoples has even more capital requirements looming.
The amended order also requires the thrift unit to boost its core capital ratio to at least 8% and its total risk-based capital ratio to at least 12% by July 14 — exceeding the typical minimums needed to be well capitalized.
A plan to achieve those ratios is due by June 15. Meanwhile Peoples must have a written contingency plan to sell or liquidate itself in the event it becomes critically undercapitalized before then.
Peoples said the thrift unit had a core capital ratio of 1.81% and a total risk-based capital ratio of 4.15% at March 31.
The OTS initially issued its order April 2 without imposing specific capital ratios or deadlines.
Though Peoples has been struggling to survive for several quarters, the latest requirements increase the pressure on the deeply troubled company.