Martin Meehan will remain a director of troubled Sage Bank
New UMass president has since 2009 helped oversee Lowell institution cited for weak management
The incoming president of the University of Massachusetts, Martin T. Meehan, will continue to serve as a director of a small Lowell bank that federal and state regulators recently cited for weak management and board oversight.
Meehan has been on the eight-member board of Sage Bank since 2009, when it was called Lowell Cooperative Bank. A Lowell native, he joined the board two years after he took over as chancellor of the state university system’s Lowell campus.
“It is customary for UMass chancellors and presidents to serve on boards,” UMass Lowell spokeswoman Christine Gillette said in a statement. “Marty Meehan is committed to continuing to serve on the Sage Bank board to help it through the challenges facing small community banks.”
Sage Bank, a $196 million institution with two branches, has experienced plenty of challenges in the past year.
A shareholder meeting last year was marked with bank officials shouting at each other. In November, the bank’s president, Richard Bolton Jr., and its chief financial officer suddenly resigned. Federal regulators are investigating whether the bank discriminated against Hispanic borrowers in its mortgage lending business. Sage Bank disputes any allegations of discrimination, bank officials said.
It reported a nearly $3 million loss in 2014.
In December, the Federal Deposit Insurance Corporation and the Massachusetts Division of Banks issued a consent order outlining seven pages of steps the Lowell bank had to take to satisfy regulators, including hiring an outside consultant to evaluate the performance of bank officers, past and present, and to assess the qualifications of board members to “provide guidance and oversight to management.”
The bank’s board includes business leaders from Lowell, the head of a mortgage company that Sage Bank purchased several years ago, and a real estate developer with ties to other Massachusetts banks Bolton had been involved in. Bolton and his family members were also longtime contributors to Meehan’s campaigns when he was a congressman.
As a director, Meehan was paid about $27,000 in 2014 and received shares in the bank.
Meehan is also on the board of Lowell General Hospital and the investment giant Natixis Global Asset Management. He reported earning more than $100,000 last year for his position on the Natixis board.
Meehan declined to comment about the consent order or his role on Sage’s board of directors. He directed all questions to the bank’s current president, Peter Conrad, who took over in November on an emergency basis and was officially appointed head of Sage Bank last month.
Conrad said Sage Bank is making progress toward meeting the demands of regulators. Most of the previous disputes between former executives and board members were about the direction of the bank and how much it should rely on the mortgage business, Conrad said.
In recent months, Sage has cut expenses, a retired longtime banker has joined the board as its new chairman, and for the first quarter of this year Sage reported a profit of $900,000, Conrad said.
The board is also operating more smoothly, Conrad said.
“The board is getting along nicely,” he said. “We have some excellent directors, Marty Meehan being one.”
Still, banking experts said board members of financial institutions are responsible for ensuring the company is well managed and avoids regulatory enforcement actions, such as the one Sage Bank is under.
“The board should have discovered some of the problems,” said James Post, a professor of management at Boston University’s Questrom School of Business. “The train has gone pretty far down the tracks if the FDIC is looking into the allegations.”
A handful of banks in Massachusetts have been under consent orders in recent years, usually because regulators have concerns about problem loans, for example, or risky investment portfolios.