Federal Reserve Enforcement Action Flags Deficiencies at UniBank

Washington-based UniBank and its parent company U&I Financial have agreed to measures to be taken under an enforcement action issued Thursday (Oct. 24) by the Federal Reserve Board.

The Washington Department of Financial Institutions (WDFI) also agreed to these measures.

The enforcement action follows the finding of certain deficiencies at the bank in examinations conducted by the WDFI and the Federal Reserve Bank of San Francisco and issued in February and July.

In addition, the Federal Reserve Bank’s most recent consumer compliance examination of the bank found deficiencies in its consumer compliance risk management program.

The enforcement action noted that U&I and UniBank have taken steps to address these deficiencies.

Under the enforcement action, the bank’s board of directors are required to submit a written plan to the supervisors to strengthen board oversight of the management and operations of the bank.

It also requires that the bank’s board of directors retain an independent third party to assess the effectiveness of its corporate governance and prepare a written report of findings and recommendations. The board must then submit a written plan to the supervisors that addresses those findings and recommendations and describes the specific actions it will take to strengthen its corporate governance structure.

Similarly, the action requires that the bank retain an independent third party to review the bank’s consumer compliance program and then submit a written consumer compliance plan to the supervisors to address the review’s findings and recommendations.

The bank must also submit written programs to improve its lending administration and credit risk management, its loan grading and loan review, its allowance for credit losses, its revised code of ethics and conflicts of interest policy, and its liquidity and funds management, according to the enforcement action.

UniBank has seen some leadership changes this year, with executive vice president and chief risk officer Stephanie Yoon being named interim CEO in February and permanent CEO in July.

The bank also added two new directors — Ken Johnson and Scott Strand — and appointed director Ellis Chang to the position of chair.

It announced two more leadership changes in September, naming Robert Disotell executive vice president and chief credit officer, and JJ Kim executive vice president and chief banking officer.