OneUnited head testifies in church bankruptcy case

The Charles Street AME Church in Boston.
Pat Greenhouse/Globe Staff/File
The Charles Street AME Church in Boston.

OneUnited Bank president Teri Williams testified that she was personally involved in trying to work out nearly $5 million in loans with leaders of the Charles Street African Methodist Episcopal Church in the summer of 2010, after the church had defaulted on a construction loan.

“We were engaged quite a bit,” Williams said Thursday on her second day of testimony in the church’s case in US Bankruptcy Court in Boston. She said she as well as loan officers and other members of her staff met with the church’s pastor, the Rev. Gregory G. Groover Sr., and Dennis Lloyd, who was overseeing construction of a community center near the historic Roxbury church.

Williams said she visited the site of the Roxbury Renaissance Center between late 2009 and September 2010 and encouraged the church to clean up the site to attract donations. She said a member of the bank’s board had even contacted the Boston Symphony Orchestra to perform there to help drum up support.


“I thought it was very important that the center be finished,’’ for the sake of the church and the community, Williams said in court. They were her first extensive public comments to date on a loan dispute that has been costly for both sides and has sparked neighborhood protests and an outcry from politicians when the bank threatened to foreclose on the church in February.

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Unable to get the bank to negotiate, Charles Street filed for Chapter 11 bankruptcy protection in March. It is offering to repay the entire amount due but wants to spread the debt out over 30 years — far longer than the bank had intended, and longer than many commercial loans.

Groover, the pastor, later took the stand and testified that the meeting with Williams happened a year earlier, before the loan was in default. (Williams had testified that she had difficulty recalling dates.)

Groover said he had at least two meetings with the bank’s chief executive, Kevin Cohee, after the loan was in default. Cohee said he would again extend the construction loan, Groover said, if the church came up with $1 million to deposit with OneUnited as collateral. The church was not able to raise those funds, he said.

In December 2011, with litigation underway between the church and the bank, things grew more tense, Groover said. One early afternoon, Mel Miller, a director on the bank’s board and publisher of the Bay State Banner, came to see Groover and told him to cease the legal action and repay the loans, Groover testified. If that did not happen, Miller would “take down” the church, Groover recalled him saying.


Miller did not return a call seeking comment.

The bank is contesting the bankruptcy, arguing that the church is not an independent entity, but rather a trust controlled by the greater African Methodist Episcopal Church. If the judge agrees, that would mean it is ineligible to apply for bankruptcy protection. OneUnited’s lawyers are arguing that the District AME church, based in Philadelphia, should pay off the debt.

Williams, OneUnited’s president, said the guarantee of the district church was important when the construction loan was written in 2006.

“We would not have done the loan without the guarantee,’’ she said.

Williams also acknowledged that the lending environment became difficult during the period of the church loan. Starting at some point in 2007, she said, the bank did not originate any commercial loans.


By June 2008, Charles Street’s loan was coming due in full, but the center was far from complete, due to construction delays. The church would ask for, and receive, five loan extensions through 2009. Meanwhile, OneUnited was facing pressures of its own, having lost $50 million on mortgage-related investments that went bad. It was seeking $12 million in federal bailout funds amid the financial crisis. The bank was also under fire from regulators to improve its loan management and cut back on what it called excessive executive pay and perks.

Church lawyers and other close observers of the dispute have asserted that the Charles Street loan posed a particular problem for the bank with regulators because it was among OneUnited’s largest loans. But when asked under oath about the loan size, Williams denied that it was among the bank’s largest loans at the time. Upon further questioning, however, she said it was probably in the top five construction loans extended by the bank.

Charles Street defaulted on the $3.6 million construction loan in December 2009. By September 2010, the bank sued the church for payment. That case is on hold, pending the outcome of the bankruptcy case. In February of this year, the bank threatened to foreclose on a separate loan, of more than $1 million, for which the church building itself was pledged as collateral. The church filed for bankruptcy protection to stave off a foreclosure auction.

Beth Healy can be reached at