The ailing $140 million Bay Gulf Credit Union, of Tampa announced plans to merge with the $1.1 billion MidFlorida CU of Lakeland.
Bay Gulf has been operating under the orders of state regulators to restore capital and alter its reserve debt practices since April.
In a joint statement, Bay Gulf's president, William DeMare, said the decision to merge, implemented by the CU's board in line with the state's order, "was not an easy one" but become prudent in light of the lingering economic problems impacting the Tampa market.
Under the consolidation, MidFlorida, with a net worth of $130 million and 9.3% capital, will gain seven locations in Sarasota and Hillsborough counties on Florida's Gulf Coast. Bay Gulf, which lost a restated $2.1 million last year and $800,000 in the first quarter, has been operating at 5.2% capital and had been ordered by Linda B. Charity, director of the Florida Division of Financial Institutions, to restore capital in 10 quarters and alter how it treats reserves on restructured debt.
Kevin Jones, president/CEO of MidFlorida, told Credit Union Times "Bill has been under pressure for a merger but it is something that we have been discussing for several years and for us it is an excellent fit allowing us to expand into Tampa." His own CU, he said, has managed to "avoid the boom and bust real estate cycle" which hit Tampa so hard.
The Bay Gulf merger, to become effective in September, will create a CU with $1.55 billion in assets and 150,000 members across the state.
There are no current plans, said Jones, to pursue more Florida mergers "except when it makes sense from a strategic sense." A year ago, he said, MidFLorida pursued a merger with the ailing Sarasota Coastal CU, which later was merged into Achieve CU. The MidFlorida and Sarasota Boards "simply did not agree" on the terms, he said.
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