Tremont blames bad loan for woes
Tremont Credit Union, which was chastised by regulators last year for “self-dealing and insider abuse’’ by credit union officers, said the problems stemmed from a $3.9 million business loan approved by an executive for an acquaintance without following proper lending procedures.
The Braintree credit union later wrote off the loan, a line of credit, after it became delinquent in 2009. The credit union and federal and state regulators also launched investigations.
The investigations into the $3.9 million loan were first disclosed in a tax filing by the nonprofit financial institution. Regulators also found that Tremont’s board of directors did not exercise proper supervision over the nonprofit’s senior management.
In 2009, the bank lost $11.5 million, including the $3.9 million write-off.
Since then, the credit union has taken a number of steps to clean up its books and practices. It replaced the entire board of directors last year and overhauled its lending procedures.
In March, Tremont announced that Charles Baker, a former Republican gubernatorial candidate and Harvard Pilgrim Health Care chief executive, joined the board. The credit union said it also recovered almost all the $3.9 million from its insurance last year, when it earned $7.7 million.
“Tremont is a vastly improved institution,’’ said credit union spokesman James Borghesani.
The credit union, with five offices in Boston and Braintree, has more than 27,000 members and nearly $173 million in assets. Tremont is open to Massachusetts residents of Latvian heritage; people who live or work in Suffolk, Middlesex, or Norfolk counties; or people who work for affiliated groups including the Dana-Farber Cancer Institute and Boston public schools.
Todd Wallack can be reached at email@example.com.