THE outgoing chairman of Darlington Building Society has made a public apology to its members for the society’s £2.5m annual loss – the first in its history.

Speaking at the society’s annual meeting yesterday at its Darlington headquarters, William Baker Baker said the past financial year had been the most difficult in its 152 years of existence.

Referring to the loss, recorded in the last financial year, he said: “The board regrets that we have made a first loss in our society’s history and I would like to say sorry to our members.”

Mr Baker Baker, who is being replaced by Christopher Fleetwood, said the loss should be set against reserves of £38m the society had, adding: “This does not endanger the society nor does it have any impact on members’ savings. Investors should be assured that their money is safe.”

The society has blamed the loss on its house building subsidiary Darlington Homes, against which it was forced to write off £3.4m last year.

It was also obliged to pay £700,000 – a levy placed on it by the Financial Services Compensation Scheme.

Mr Baker Baker conceded the society had not anticipated the collapse in the housing market and had been “too highly leveraged” in the sector in recent times.

It now plans to withdraw from property development and dispose of remaining stock as and when opportunities arise, although officials stressed this would not result in a “fire sale”.

Members were told that the society would not be making any more commercial loans for the forseeable future, although it was stressed that relationships with existing borrowers would continue.

New chief executive David Dodd said the board and senior management had developed a “robust” plan to take the society forward and predicted it would make a small profit by the end of the year.

He added: “We will not abandon the values that make us Darlington Building Society.

We will not waste money or be profligate with money.”

Earlier this year, the society revealed that 30 staff were being lost through voluntary redundancy and early retirement, although a spokesman said it had “no plans” to add to that figure.

Mr Dodd confirmed that salary grades had been frozen for staff who had also not received cost of living increases this year and who were having to work “harder and smarter”.

He also said the society would have to be more careful about charity contributions because of the focus on costs and delivering a profit.

The board of directors faced questions from local GP Ian Ross, a society member for 38 years, about the renumeration package for outgoing chief executive Peter Rowley, who was not present at the meeting and was not required to attend.

Mr Rowley last year received £196,487 from the society, making him among the highest paid of chief executives from similar-sized building societies.

Dr Ross asked if Mr Rowley, who announced his retirement in February after 17 years as chief executive, was receiving a pension from the society.

He said: “Is the board committed to ensuring that he is not paid any more than necessary?”

Mr Baker Baker said it would inappropriate to go into detail about Mr Rowley’s pension arrangements, adding that he was “receiving what he was contractually entitled to – no more, no less”.