Make us your home page
Instagram

Big credit union merger called off; potential disruptions blamed

We believe this merger would help both credit unions achieve their ultimate goal to provide better value to our member-owners.

Tom Dorety, president of Tampa's Suncoast Schools Federal Credit Union, March 3, 2009

Benefits … and greater efficiency in several areas are just part of the merger potential.

Bucky Sebastian, CEO, Tampa's GTE Federal Credit, March 3, 2009

Never mind.

The proposed merger of two large Tampa federal credit unions to create the nation's fifth-biggest credit union was called off Wednesday. The credit union executives, Dorety and Sebastian, issued a joint statement saying that after taking a closer look at each other's financial books, they elected to call it quits.

"The potential disruption in operations to both organizations was extensive enough to outweigh the potential benefits of the merger," they said.

Suncoast Schools FCU already boasts more than $6 billion in assets, and GTE Federal is closing in on $2 billion. By credit union standards, these two are Big Boys. In fact, Suncoast by far is the largest credit union or commercial bank headquartered in the Tampa Bay area.

Surely, back in March when they first unveiled a merger interest and issued those thumbs-up statements above, they knew such a merger deal would be stressful.

So what "potential disruption" did they see after doing "due diligence" — financial talk for kicking each other's tires to see how sound the other institution really is — that merited killing a proposed merger?

I told Dorety on Wednesday that I was cynical about such vague reasons for ending a merger. Both credit unions have racked up consecutive quarters of losses. The economy stank in March when the deal was unveiled. It still stinks.

After all, the larger Suncoast Schools lost $76.7 million in 2008 and another $53.6 million in the first quarter of 2009. Smaller GTE Federal lost $27.5 million last year and another $21 million in the first quarter of '09. Neither institution declared how it did in the most recent quarter ended June 30. Odds are good it won't be pretty.

Perhaps, I asked Dorety, combining two institutions not operating on all cylinders is not the best strategy?

Dorety was gracious but denied either credit union found anything on the other's books to prompt an end to the merger.

The cost of short-term disruptions to service, systems and employees just outweighed longer-term benefits of becoming one institution, he stressed. He denied a bad economy influenced the decision to call the deal off.

As an industry, Dorety reminded me, credit unions are doing okay. Do you see credit unions seeking federal bailouts like the big banks? Other than Eastern Financial Florida FCU in Miramar, seized by regulators in May, do you see credit unions failing with the frequency of banks nationwide and in Florida?

Well, no. But neither Suncoast nor GTE is flying high. Bauer Financial, which rates credit unions from zero (big trouble) to 5 stars (great shape), tagged Suncoast with 2 stars (mediocre) several quarters ago. GTE had 3 stars at the end of 2008 but fell to 2 stars in the first quarter of '09.

In this deal, 2 + 2 would not equal 4.

Robert Trigaux can be reached at trigaux@sptimes.com.

Big credit union merger called off; potential disruptions blamed 07/15/09 [Last modified: Wednesday, July 15, 2009 8:23pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. In your 20s and living with mom and dad? In Florida, you're not alone.

    Human Interest

    TAMPA — After graduating from the University of Florida in 2015, Gabrielle Piloto jumped on the highway and headed south to Tampa.

    Gabrielle Piloto, 22, moved home to live with her grandparents in West Tampa after graduating from the University of Florida in 2015. [MONICA HERNDON   |   Times]

  2. Senate leaders unveil bill to repeal the Affordable Care Act

    Health

    WASHINGTON — Senate Republicans, who have promised a repeal of the Affordable Care Act for seven years, took a major step on Thursday toward that goal, unveiling a bill to cut Medicaid deeply and end the health law's mandate that most Americans have health insurance.

    U.S. Senate Republicans on Thursday unveiled a proposal to repeal and replace the Affordable Care Act. The bill's chief author, Senate Majority Leader Mitch McConnell, has said "Obamacare is collapsing around us, and the American people are desperately searching for relief." [AP]
  3. Southwest Airlines to offer flights from Tampa to San Diego

    Airlines

    TAMPA — Southwest Airlines will offer new nonstop service from Tampa International Airport to San Diego International Airport beginning Jan. 8, 2018.

    Southwest Airlines is planning to launch service from Tampa to San Diego.
[Times file photo]
  4. Tampa Bay homes values continue to rise along with sales prices

    Real Estate

    For the second month in a row, Tampa Bay had one of the highest year -over-year increases in home values in May, Zillow reported today.

    For the second month in a row, Tampa Bay had one of the highest year -over-year increases in home values in May, Zillow reported Thursday.
[Times file photo]
  5. Busy start has Florida Hospital Center Ice dreaming big

    Tourism

    WESLEY CHAPEL — Opening day brought 600 doctors, administrators and their families from Florida Hospital. Soon after that, the facility hosted its first junior league game and a collegiate showdown. A few weeks later, 200 kids, ages 4 to 9, participated in national Learn to Play Hockey Day.

    Alex Senushkin and his grandson, Styopa Kulshyn, 3, of Lakeland, skate at the Florida Hospital Center Ice rink in Wesley Chapel.
[CHARLIE KAIJO   |   Times]