BOSTON-Tremont CU, the $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.
The supervisory agreement for the Braintree, Mass.-based CU was organized in cooperation with the Massachusetts Division of Banks. 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 the 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, and began a search for a permanent CEO to replace the temporary manager.
The LUA also bars the credit union from making any new loans to members who have loans charged-off or classified.
Credit union officials said they have reconstituted Tremont's board of directors and plan to name a new CEO by the end of the month. The LUA also directs Tremont to notify NCUA before making any changes in its management or board "due to the severity of the concerns identified in this examination" and develop a number of other plans to periodically review its loans and improve its earnings.
Tremont's 2009 financials include a 78% increase in delinquent loans, requiring a five-fold increase in allowance for loan loss provisions. The CU's delinquency ratio was 8% for 2009. The increase in ALL boosted the credit union's losses fro $1.9 million for 2008.
The credit union was chartered in 1952 and has five offices in Boston and one in Braintree, a suburb 20 miles south of Boston.
