TAMPA, Fla. – Among the factors that killed the proposed combination of Suncoast Schools FCU and GTE FCU, the biggest credit union merger ever, are the effects of diminishing capital in the two troubled credit unions, sources indicate.
The two Tampa-based credit unions called off the merger last week, saying the decision was mutual and "based on the determination that the potential disruption in operations to both organizations was extensive enough to outweigh the potential benefits of the merger."
The combined entity would have had assets of about $7.8 billion and net worth of about $450 million, less than the 6% that NCUA considers adequately capitalized. What pushed the combination below the magic 6% mark is $35 million in charges the two took in the second quarter for their share of the corporate credit union bailout.
The $30.6 million NCUSIF stabilization charge taken by Suncoast Schools pushed its net worth below 6%. Otherwise, Suncoast Schools, Florida’s biggest credit union, would have lowered its losses from $76.7 million at the end of the first quarter, to $23 million at mid-year. But the NCUSIF charge made it a $53.6 million loss at June 30.
GTE, which reported net worth just over 6% at mid-year, reported losses narrowed from $27.3 million in the first quarter, to $6.8 million at mid-year. But a $14.3 million NCUSIF stabilization cost made it into a $21 million loss.
