The merger trend in Florida showed no signs of letting up last week with the troubled $220 million Sarasota Coastal CU entering merger talks with $650 million Achieva CU of Clearwater.
Disclosure of initial feasibility talks was made by the two CUs, which cited the state's deep housing recession as a major factor in combining the two CUs, both of which suffered loan losses in 2008.
The planned Achieva-Sarasota Coastal merger comes on the heels last month of Space Coast CU's NCUA-engineered takeover of Eastern Financial Florida CU leading to a likely merger. The combined CU would have $3 billion in assets and follows another multibillion-dollar Florida combination between Suncoast Schools CU and GTE FCU.
The latest merger proposal was revealed after a previously planned consolidation between Sarasota Coastal and the $1.2 billion MidFlorida FCU of Lakeland fell through in a dispute over composition of the merged board.
Sarasota Coastal, which lost $2.7 million in 2008 and $3.1 million in the first quarter of 2009, had been denied two seats on the consolidated board, which President/CEO Tom Randle called a “deal breaker.”
Randle, who has been outspoken on the dire consequences of the NCUA assessment on small CUs in Florida, conceded last week that the collapse of the proposed MidFlorida deal was forcing Sarasota to find a new partner.
“It's the perfect storm,” said Randle in describing the 50% drop in Florida housing prices, the high foreclosure rate and 10% unemployment in the southwest part of the state. The “bursting of the housing bubble has simply hammered southwest Florida from Hillbrook all the way to Miami,” said Randle, grouping Florida “with the other sand states,” including Arizona, California and Nevada.
On top of that, “the death knell” for his CU was the NCUA conservatorship and assessment, according to Randle, forcing Sarasota Coastal to shop seriously for a merger partner; the CU's capital ratio hit 5.1% after the write-down
Without the NCUA action-which he argued “simply wasn't right”-Sarasota Coastal could have survived restoring its capital by 2010. He also suggested more mergers of small CUs would be occurring in Florida in the months ahead. Randle has been Sarasota Coastal's president for 20 years.
Gary Regoli, president/CEO of Achieva since June 2008, said there are no plans for Achieva to look for other merger partners, though his CU did merge two other Florida CUs in the last three years. Regoli also said the proposed combination of the Sarasota and Clearwater credit unions would benefit members since “our credit unions have similar values and philosophies that would make for a strong partnership.”
The combined CU will have $800 million in assets and nearly 100,000 members. Achieva currently serves Pinellas, Pasco, and Hernando Counties. Sarasota Coastal operates in Manatee, Sarasota and Charlotte Counties.
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