The merger trend in Florida showed no signs of letting up lastweek with the troubled $220 million Sarasota Coastal CU enteringmerger 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 incombining the two CUs, both of which suffered loan losses in2008.
The planned Achieva-Sarasota Coastal merger comes on the heels lastmonth of Space Coast CU's NCUA-engineered takeover of EasternFinancial Florida CU leading to a likely merger. The combined CUwould have $3 billion in assets and follows anothermultibillion-dollar Florida combination between Suncoast Schools CUand GTE FCU.
The latest merger proposal was revealed after a previously plannedconsolidation between Sarasota Coastal and the $1.2 billionMidFlorida FCU of Lakeland fell through in a dispute overcomposition of the merged board.
Sarasota Coastal, which lost $2.7 million in 2008 and $3.1 millionin the first quarter of 2009, had been denied two seats on theconsolidated board, which President/CEO Tom Randle called a “dealbreaker.”
Randle, who has been outspoken on the dire consequences of the NCUAassessment on small CUs in Florida, conceded last week that thecollapse of the proposed MidFlorida deal was forcing Sarasota tofind a new partner.
“It's the perfect storm,” said Randle in describing the 50% drop inFlorida housing prices, the high foreclosure rate and 10%unemployment in the southwest part of the state. The “bursting ofthe housing bubble has simply hammered southwest Florida fromHillbrook all the way to Miami,” said Randle, grouping Florida“with the other sand states,” including Arizona, California andNevada.
On top of that, “the death knell” for his CU was the NCUAconservatorship and assessment, according to Randle, forcingSarasota Coastal to shop seriously for a merger partner; the CU'scapital ratio hit 5.1% after the write-down
Without the NCUA action-which he argued “simply wasn'tright”-Sarasota Coastal could have survived restoring its capitalby 2010. He also suggested more mergers of small CUs would beoccurring in Florida in the months ahead. Randle has been SarasotaCoastal's president for 20 years.
Gary Regoli, president/CEO of Achieva since June 2008, said thereare no plans for Achieva to look for other merger partners, thoughhis CU did merge two other Florida CUs in the last three years.Regoli also said the proposed combination of the Sarasota andClearwater credit unions would benefit members since “our creditunions have similar values and philosophies that would make for astrong partnership.”
The combined CU will have $800 million in assets and nearly 100,000members. Achieva currently serves Pinellas, Pasco, and HernandoCounties. Sarasota Coastal operates in Manatee, Sarasota andCharlotte Counties.
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