Union Federal to OK Order Altering Its Operations : Thrift: Roger L. Kringen says he is retiring as chairman, president and chief executive of its parent company, UnionFed.
UnionFed Financial Corp. said Tuesday that its savings and loan subsidiary will soon consent to a cease-and-desist order from federal regulators that will require changes in internal operations.
Some directors of the thrift, Union Federal Savings Bank in Los Angeles, also agreed to pay penalties to the Office of Thrift Supervision, without acknowledging any wrongdoing. The thrift did not reveal the names of directors who must pay the fines or the amounts.
The thrift also announced that Roger L. Kringen said Tuesday that he is retiring as chairman, president and chief executive of UnionFed, effective April 1. He will be replaced by David S. Engelman, a San Diego-area consultant who manages corporate and real estate divestitures.
Union Federal, a 27-branch savings and loan with $2.4 billion in assets, has been losing money as it socks funds away in reserve for possible loan and real estate investment losses. Under a 1989 federal law, it must close down its real estate development subsidiary.
The company reported a loss of $11.6 million for its fiscal second quarter, which ended Dec. 31. That wiped out a modest first-quarter profit and left the thrift with a $10.6-million loss for the first six months and a $18.1-million loss for its 1990 fiscal year, which ended June 30.
The cease-and-desist order the thrift is expected to sign with OTS would require Union Federal to strengthen internal controls to limit loans to one borrower, develop and implement policies and procedures that comply with regulations and improve other areas in its lending business.
At the end of December, the thrift’s bad loans amounted to 6.63% of its total loans, well above the 1% to 3% that bankers and regulators are comfortable with. Much of its troubles involve a series of loans to a Boston developer.
The thrift, which is not meeting one of three capital requirements imposed by federal law, last week submitted a plan to regulators to comply with the rules. The regulators had rejected an earlier proposal.
The company hopes to comply with the risk-based capital requirement by closing its real estate development subsidiary and liquidating the unit’s $129.5 million in assets by mid-1994, the deadline set by federal law.
Michael Hooper, a spokesman, said the company expects that its latest capital plan will be approved.
The thrift’s problems have drained Kringen, who said he is worn out from battles with thrift regulators for the last year.
“The business I enjoyed the most, which is real estate development, has been eliminated by regulation,” said Kringen, who will turn 64 on Friday. The S&L; business, he said, is “no fun anymore.”
The San Clemente resident started his career as a Union Federal teller in 1950 and worked his way up the corporate ladder, taking over his current position after the founder’s son, William A. Martin Jr., retired last year.
Engelman, 53, of Rancho Santa Fe, is a director of Commercial Federal Bank, a savings and loan in Omaha with $5 billion in assets and 50 branches in four states.
