First Financial Northwest Inc. in Renton, Wash., said that its bank unit has entered into a formal agreement with its regulators.
The $1.3 billion-asset company said the order requires the bank to boost its leverage ratio to 10% and its total risk-based capital ratio to 12%. First Financial entered into the consent order with the Federal Deposit Insurance Corp. and the Washington Department of Financial Institutions.
Yet First Financial said it currently exceeds these capital ratios, as its board of directors voted Sept. 15 to inject more capital from the holding company into the bank unit.
The order also requires the bank to reduce problem loans, review lending and collection policies, reduce loan concentrations, incorporate the terms of the order into a new three-year strategic plan, increase board oversight and obtain an independent study of management resources.
The order is based on items identified in a regulatory exam completed earlier this year, the company said. CEO Victor Karpiak said Monday that First Financial has made "significant progress" on many of the issues since the exam, including management changes and restructuring of its lending and credit department.