Florida Mega-Merger Primed to Turbo Boost MBL Cap, Expand Trust Services
The president/CEO of GTE FCU said the financial institution has offered its business loan program for five years. Under its current 12.25% of assets MBL limit, it can go no further than $210 million. Sebastian said roughly $110 million in lending is already booked.
"That puts you on notice. While [business lending] wasn't a consideration for the merger, it will have the pleasant effect of raising the lending limit significantly," Sebastian said.
Pending approval of the merger, Suncoast Schools and GTE would have a combined asset base of $7.8 billion, making it the fifth largest credit union in the country and the largest in Florida.
According to NCUA call report data, GTE's member business loans grew by more than $30 million between December 2007 and December 2008. The credit union's program has been helped along by the shakeups in the banking industry, including with Wachovia, which once had a presence in the Tampa area but has since been replaced by Wells Fargo, Sebastian said.
"It has created some demand. Those big banks have cooled, forestalled and shied away," he noted, adding that some of the strongest competition is coming from an $800 million commercial bank in the area. Overall, credit unions in the Tampa area, where both Suncoast Schools and GTE are based, do roughly 40% of the business lending there, Sebastian said.
Meanwhile, Suncoast Schools' business lending program is not as robust at GTE's said Tom Dorety, president/CEO. The credit union has about $19 million outstanding loans, with the average loan in the $200,000 range. Suncoast Schools grew its member business loans from just over $15 million in December 2007 to $16 million in December 2008, according to NCUA call report data. Last year, plans were in place to expand and improve Suncoast Schools' business services program, Dorety pointed out. Now that the merger process is underway, he is just as encouraged about the possibility of having more room to grow.
"We're more than happy if the merger goes through because it would open up that cap dramatically," Dorety said. "The other thing that might happen is once we've reached the bottom of the [state's economic] trough, opportunities for building more with small business will increase. We have a huge gulf to fill."
Suncoast Schools made history in 2003 as one of the primary founders of Tampa-based MEMBERS Trust Co., the industry's only nationally chartered trust company for credit unions. At the time of launch, the credit union merged its 16-year old trust company into MEMBERS Trust.
Dorety said MEMBERS Trust has $100 million in trust assets under management, down from nearly $110 million because of the market flux. GTE was one of the early users of the company's reverse mortgage program launched more than a year ago. The trust company has about eight active credit union reverse mortgage clients and 60 reverse mortgages on the books. GTE has roughly $1 million in trust assets under management.
"The merger opens up another base of membership. I think as the merger progresses-about the time that is happening-there may come a good time in the markets to get engaged more," said Dorety, who serves on MEMBERS Trust's board.
For both business services and trust services, the merger has the potential to put Florida back in the sunshine, Sebastian said, adding the state most likely reached its housing bottom in September or October 2008. GTE does not have a significant amount of commercial property loans, but if it wanted to go more aggressively down that path, it is limited on several fronts.
"This is exactly why we need to raise the business lending limit. We're handcuffed by reserve limitations and business lending limitations," Sebastian said. "I tell people we, meaning Florida, were worst first. I also think we will be better first."