Federal regulators have for several years been concerned about account security at Dwelling House Savings & Loan, but bank officers said electronic thefts that brought the Hill District institution to the brink of ruin were committed by an organized band of 10 to 12 cyber thieves now being pursued by federal and local law enforcement authorities.

Meanwhile, the historic African-American financial institution is immersed in delicate negotiations with 62 banks nationwide that played an unwitting role in processing bogus transactions that drained Dwelling House of its entire stockpile of reserve capital.

"In terms of Dwelling House, the thieves are not important," said John Haines, the savings and loan president. "The police are after the thieves.

"Our focus is the banks involved in the transactions. Dwelling House is after the recovery of the funds from banks that authorized the withdrawals." He would not name the banks involved.

Mr. Haines said an audit conducted in December showed fraudulent automated clearing house withdrawals had occurred throughout 2008 and became more aggressive toward the end of the year, adding up to a total loss of about $3 million.

Money is trickling back into Dwelling House's capital account each day as financial institutions reimburse the thrift for its losses, Mr. Haines said. So far about $1 million of the stolen funds has been recovered.

"Every time a bank writes us a check, the number gets lower," he said, adding that Dwelling House is at the mercy of financial institutions deciding to pay up sooner rather than later. "The question is timing."

Federal regulators at the Office of Thrift Supervision imposed a June 30 deadline on Dwelling House to increase its capital reserves. If the bank fails to meet the deadline, it could be sold or shut down.

With only three business days left, Mr. Haines said the financial institution still needs to collect another $1.5 million to $2 million.

Authorities at the Pittsburgh Police Department confirmed they are investigating the case. Federal Bureau of Investigation officials are trying to "determine if there have been any violations of federal law over which the FBI has jurisdiction," said spokesman Jeff Killeen.

FDIC records show Dwelling House has total assets of $13.4 million. Its total equity capital dropped from $3.4 million in March 2008 to a deficit of $500,000 in March this year.

The Office of Thrift Supervision has determined Dwelling House is "critically undercapitalized," and has issued a "prompt corrective action directive," which is the final step the federal agency will take before moving to shut down a financial institution.

Members of the Pittsburgh community who attended a rally to support Dwelling House last week were told that any deposits made into traditional accounts would only increase the amount of capital reserves the bank would be required to have.

"If a bank is undercapitalized and it grows its assets that only aggravates the capital deficiency," said Cornelius Hurley, director of Morin Center for Banking and Financial Law in Boston.

Bank officials have said the only way for individuals to help Dwelling House at this point would be to invest money in the bank with no guarantee of getting that money back. Supporters have pledged $20,000 in deposits so far but Mr. Haines has said he will not accept the funds until it is clear Dwelling House will survive this crisis.

This is not the first time federal regulators have expressed concerns about operations at Dwelling House.

Records provided by the OTS show banking regulators have for years been worried about the integrity of electronic money transfers taking place at the institution.

As early as July 2004, federal authorities started warning Dwelling House officials of management and staffing weaknesses in its anti-money laundering program.

The bank allowed prisoners to maintain accounts that authorities believed were being used for money-laundering and other criminal activity, according to sources close to the savings and loan.

A large number of those accounts contained substantial balances and some were even receiving questionable income tax refunds being electronically deposited. The government did not feel Dwelling House was able to manage and monitor the flow of money.

Insiders say at one point 20 percent of all Dwelling House savings accounts were prisoner accounts. The institution was reluctant to impose the sort of controls the government required because of its commitment to providing services to people who had limited access to banks.

Enforcement action records at the OTS show Dwelling House eventually was forced to scale back the inmate program. Inmates can no longer do electronic automatic clearing house transactions. The thrift can no longer open new inmate accounts and all existing prisoner accounts are limited to $25 deposits.

Mr. Haines said that issue is not related to the institution's current dilemma. "It's important to understand that none of the fraud was related to the prisoner accounts," he said.