NCUA Attempts to Stablize Eastern Financial, Mulls Future Actions
"The situation at Eastern has been very stable in terms of the financial condition and member reaction," said John McKechnie, NCUA director of public and congressional affairs, adding service has continued uninterrupted.
So far, a "minimal" number of member calls have come in asking about the conservatorship, McKechnie said. Three were received last week. McKechnie said there has been no "unusual activity" in the area of account closures or withdrawals.
On April 24, the Florida Office of Financial Regulations' Bureau of Credit Union Regulation appointed the NCUA as Eastern Financials' conservator, which then appointed $1.6 billion Space Coast Credit Union to assume managerial duties. Three days later, the Melbourne, Fla.-based credit union announced its intent to merge with Eastern Financial in Miramar, Fla.
Regarding the merger proposal, McKechnie said the NCUA Board "is continuing to assess the future course of action and has not made any decisions at this point." Space Coast spokeswoman Meredith Gibson said the merger has not been approved.
"There is a specific approval process by the NCUA and that is proceeding," Gibson said. "[Space Coast] management is still on site at Eastern Financial assessing work flows and developing production and servicing plans."
On its Web site, Eastern Financial said if the merger goes through, it would be a division of Space Coast and would become Florida's third largest credit union with more than $3 billion in assets, 350,000 members, 66 branches and 151 ATM locations. At the time of an approved merger, the combined entity would have approximately $200 million in net worth, while Eastern Financial on its own would have had very little net worth, according to the Web site (www.effcu.org).
"Once combined, all of EFFCU's assets will be written down to fair value and the entity should be profitable in future years because of all the prudent write-downs that were taken during 2007 through 2009," read Eastern Financial's Web site.