MIRAMAR, Fla. – NCUA is expected to announce a deal as soon as today that would allow Space Coast CU to acquire the failed Eastern Financial Florida CU, the venerable old airline employees credit union that ran afoul of the state’s real estate bust.
Space Coast, which is based 100 miles north in Melbourne, has submitted an application to NCUA to acquire the troubled Eastern Financial, which was taken under conservatorship Friday after reporting negative capital of $3.5 million at the end of the first quarter.
The deal would combine two credit unions of similar size. Space Coast CU has $1.7 billion in assets and about 150,000 members. It reported a first quarter loss of $11.7 million, which included an $8.5 million charge for the corporate credit union bailout and a $3.2 million operating loss, and had strong capital of more than 11%.
Eastern Financial has about $1.6 billion in assets--down from $2.4 billion just 18 months ago--and 220,000 members. It reported a $133 million loss for 2008.
A team of ten senior Space Coast managers were engaged by NCUA Friday to manage Eastern Financial under the conservatorship, with the possibility it could turn into a purchase and assumption merger. Under a so-called P&A, Space Coast would purchase the good assets of Eastern Financial, like the member accounts and branch network, and NCUA will acquire the bad assets, namely poor real estate loans, including those for two large condominium projects.
Eastern Financial was chartered in 1937 to serve employees of Eastern Airlines, then when the airlines went bankrupt in 1991, expanded to serve more than 1,200 select groups.
