State regulators have publicly cited a Braintree credit union for a host of problems, including insider abuses by officers, operating without adequate supervision from the board of directors, and creating insufficient earnings and reserves to protect deposits.
In an April 26 "letter of understanding" with the Tremont Credit Union, the Massachusetts Division of Banks and the National Credit Union Administration ordered the bank to begin a search for a permanent chief executive, arrange for an external auditor to analyze its loan portfolio, and hire an outside party to investigate instances of lending abuse, insider abuse, and self-dealing within 30 days.
But Gary P. Fishlock, the interim CEO who was brought in to help reorganize the credit union six months ago, said the bank has "already addressed 90 percent" of the items in the letter.
"We've been working closely with state and federal regulators,'' said Fishlock, who said he has 43 years of experience helping credit unions working out their problems. "We are well ahead of the curve in completion and the timeline."
The credit union removed its prior CEO, Leonard Broderick, on Dec. 8 and its vice president of community affairs, William Moran, on Oct. 30, Fishlock said.
He also said the credit reconstituted its board of directors last week and plans to name a new CEO by the end of the month. Regulators also ordered the bank to notify it 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.
The letter, the first time in years that the state has brought enforcement against a credit union, suggested the problems came to light in a June 30 examination of the credit union. But the public letter did not detail the "instances of self-dealing and insider abuse by officers of the credit union."
Fishlock said the credit union is still investigating the matter and could not say whether it would lead to any lawsuits or criminal charges or give further details. But he said the individuals involved no longer work for the credit union. Regardless, Fishlock said the credit union is now profitable and in sound financial condition.
"This is a viable institution," Fisklock said.
The financial institution earned $336,720 in the first quarter, compared to a $45,188 loss in the first quarter last year. The credit union, founded in 1952, has five offices in Boston and one in Braintree.
The credit union is open to workers who live or work in Suffolk, Norfolk, and Middlesex counties, are Bay State residents of Latvian heritage, or are affiliated with several community or employer groups, including the Boston Public Schools, Boston Children's Hospital, Dana-Farber Cancer Institute, Amtrak, and Blue Cross Blue Shield of Massachusetts.
Tremont had 28,233 members and nearly $179 million in assets at the end of March, according to the NCUA. Fishlock said even if Tremont were to be liquidated, it has enough assets to fully cover deposits. In addition, the federal NCUA insures also deposits up to $250,000.