Eastern Financial Florida Becomes Relic
Eleven years after the now-defunct Eastern Airlines first flew the skies from its Miami-based hub, a credit union chartered to serve the carrier's employees made its debut.
Originally chartered in 1937, for more than 70 years, Eastern Financial Florida Credit Union built its presence alongside its airline sponsor, which started operating in 1926 and shut down for good in 1991 after succumbing to financial woes, layoffs, strikes and eventually bankruptcy. On May 3, at branches across South Florida, the lights went out on the Eastern Financial Florida Credit Union name.
The change is the next phase following a merger with the $1.6 billion Space Coast Credit Union in June 2009. EFFCU had been operating as a division of Space Coast and combined, the $3 billion cooperative served more than 350,000 members, had 60 branches and 140 ATMs, making it the third largest CU in the Sunshine state. It now serves members in 17 counties in Florida.
"This merger was not an exercise to put the problems in the past but is an opportunity to create a powerful member-owned cooperative that can deliver value to our members like never before. We exist solely to serve the needs of our members," wrote SCCU President/CEO Douglas Samuels in a May letter to EFFCU members.
SCCU completed a major transition April 30 to May 2 converting more than 260,000 member records, which included millions of pieces of data, according to Meredith Gibson, SCCU spokeswoman. EFFCU members will now be able to use all branches, ATMs and access online banking and bill pay services through one website. Gibson said thanks to a year of extremely detailed planning and the support of the CU's employees, vendors and consultants, the conversion went "extremely well." However, as conversions go, there were a few bugs.
"We encountered some not completely unanticipated issues with online banking and online bill payer that had to be addressed. They have been resolved," Gibson said, adding some employees had connectivity issues as they logged on to the transaction system May 3. Due to high volume of logins to the "view statements" area of online banking, members experienced slow response times. Gibson said this issue will be resolved going forward.
"We have a command center set up, we have vendor resources on call or in-house, and we are addressing issues as they come up," Gibson noted.
Six years before Eastern Airlines ceased operating, EFFCU began adding more select employee groups in an attempt to diversify its membership, at one point serving 900 of them. The CU continued with a trend among other its Florida peers by converting from a federal to a state charter.
The past few years would cripple EFFCU as Florida became one of the hardest hit states with real estate foreclosures. The NCUA placed the CU in conservatorship, and last March, the Florida Office of Financial Regulation issued a cease and desist order against it for a series of unsound and unsafe practices. After reviewing findings from an Oct. 6, 2008, report of examination, the OFR concluded that the CU had engaged in 15 unsound and unsafe practices, including not possessing adequate loan underwriting standards or a loan review program that evaluates risks and excessive concentration in member business loans. Management at SCCU was appointed to come in and clean up operations at the troubled EFFCU.
Despite EFFCU's shaky status, Tom Baldwin, SCCU executive vice president and chief financial officer, said at the time that the decision to merge was based on whether the acquisition would provide a long-term benefit to SCCU's members. He said the Melbourne, Fla.-based CU's strong net worth and the application of various operating efficiencies brings the reserves of the merged credit union back to an acceptable level.
Meanwhile, Gibson said with the conversion complete, the next steps "are to finish the cleanup of the many little operational details related to the conversion, answer our members' immediate questions, and then applying all of our focus on only serving our members."