BOSTON – Tremont CU, a $180 million credit union that suffered an $11.6 million loss last year, agreed to correct severe management weaknesses involving insider abuses, self-sealing, unsafe lending and inadequate reserves as part of a supervisory agreement, NCUA announced Friday.
The supervisory agreement comes after the credit union’s CEO Leonard Broderick was fired in December and replaced on an interim basis by a work-out specialist, Gary Fishlock, a 43-year industry veteran who formerly ran STCU CU in Springfield.
Under a Letter of Understanding and Agreement, the credit union must hire a third party to investigate instances of lending abuse, insider abuse and self-dealing within 30-days and report back to both NCUA and state regulators on the probes. It also must begin a search for a permanent CEO to replace the temporary manager.
The LUA bars the credit union from making any new loans to members who have had loans charged-off or classified.
Tremont’s 2009 financials include a 78% increase in delinquent loans, requiring a five-fold increase in allowance for loan loss provisions. The credit union’s delinquency ratio was 8% for 2009. The increase in ALL boosted the credit union’s losses from $1.9 million for 2008.
