MIRAMAR, Fla. – Eastern Financial Florida CU, the one-time airline credit union plagued by problems in the mortgage markets, reported an $18.2 million loss for its third quarter, more than doubling year-to-date losses to $35 million.
The third quarter losses pushed net capital down to 6.35%.
Eastern Financial is one of several large credit unions in Florida, one of the hardest-hit real estate markets in the country, reporting big losses. Also last week, Suncoast Schools FCU, the state’s largest credit union with $6.1 billion in assets, reported a $25.7 million loss for the third quarter and $51.9 million loss year-to-date; GTE FCU reported a $2.7 million third quarter loss, creating a $21.9 million loss for the first three quarters; Fairwinds CU reported a $2.3 million loss for the quarter and an $8.8 million loss for the year; and Jax FCU reported $3.4 million in red ink for the quarter and a $5.5 million three-quarter loss.
Mark Holmes, vice president of marketing for Eastern Financial, said they continue to work to resolve major causes of the problems, including an ill-fated $300 million condominium project it helped finance in West Palm Beach that the credit union has foreclosed on. Eastern Financial is working to obtain possession of the property in order to sell it. "That’s still in litigation," Holmes told The Credit Union Journal Friday.
The $1.8 billion credit union has also marked down by at least $70 million so-called collateralized debt obligations, a kind of mortgage backed derivative that has been impacted by the meltdown in the mortgage markets.
Eastern Financial continues to cut expenses to help it navigate its troubles, according to Holmes. "We’ve taken a number of steps as part of expense controls and all that is starting to kick in," he said, noting the lay offs of 62 employees earlier this year and the cut back in departmental budgets, including his own in marketing.
The growing losses caused Eastern Financial to dismiss its president, Stephen McGill, in February. The credit union has been run since then by two senior executives, Gary Lanier, its executive vice president for sales and member services, and James Pavlonnis, its chief financial officer. Holmes said they expect to name a permanent president and CEO any day.
Eastern Financial has flown through major crises before, most especially the 1991 bankruptcy and eventual liquidation of its chief sponsor Eastern Airlines, which prompted it to adopt a multiple group form, and it now serves more than 1,500 select groups.
