MIRAMAR, Fla. – The financial condition of Eastern Financial Florida CU, the one-time high-flying airlines credit union, has continued to deteriorate in recent months, even while state regulators have slapped the credit union with a tough supervisory order.
The troubled credit union, which reported a $40.2 million loss for 2008, amended its financial statement in recent weeks to show a whopping $113.5 million loss for the year and capital of just $10,096.
Eastern Financial has yet to issue its financials for the first quarter, but charges related to the corporate credit union bailout will eliminate all the remaining capital.
State regulators are said to be discussing with NCUA a takeover of what was once Florida’s third largest credit union. An official with the Florida Office of Financial Institutions and Securities Regulations would only say they have not taken the $1.6 billion credit union under conservatorship.
An official with Eastern Financial would not comment.
The state regulators issued Eastern Financial a cease and desist order last month that covered a variety of management shortcomings, including management of member business loans, recording of delinquencies and charge-offs and the lack of a permanent CEO, since the February 2008 departure of president and CEO Stephen McGill.
Among other things, Eastern Financial was directed to charge off any permanent impairment to more than $70 million of collateralized debt obligations it holds, as well as to obtain final appraisals on an undeveloped condominium project that is in foreclosure. The regulator also cited Eastern Financial for not having enough core deposits to ensure it can meet funding obligations; not possessing adequate loan underwriting standards; carrying an excessive level of concentrations of member business loans; and not having adequate oversight to prevent violations of the Bank Secrecy Act.
Eastern Financial was chartered in 1937 to serve employees of the forerunner of Eastern Airlines, then, after the 1991 bankruptcy of the air carrier branched out to serve more than 1,000 select groups.
