TAMPA, Fla. – For Suncoast Schools FCU, Florida’s biggest credit union, that sunshine at the end of the tunnel is still a long way off.
The one-time $6.2 billion credit union, in the middle of one of the worst real estate markets in the country, still is reporting big loan losses and moving more reserves to its allowance account. Tom Dorety, Suncoast Schools’ president, can’t help but see some positive signs, including a decline in delinquencies, a flattening out of charge-offs and smaller operating losses, even as losses continued in the first quarter – to the tune of $13.2 million. “We’re looking at significant improvements in the second half of the year because of these trends,” he said.
Other big Florida credit unions are still feeling the heat: Fairwinds CU returned to the red for the first quarter with a $3 million loss; Tropical Financial reported a $2.7 million first quarter loss; Space Coast CU a $760,000 loss and Vystar CU a $290,000 loss. GTE FCU, also based in Tampa, eked out a $62,723 net for the first quarter after a $44 million loss for 2009.
Dorety sees few signs of a rebound in the real estate market along Florida’s Gulf Coast. Suncoast Schools was heavily involved in lending in the Fort Myers area, a now-depressed pocket where Norlarco CU and Huron River Area FCU helped finance get-rich-quick speculation. When the scheme went bust it left thousands of vacant homes and drove down prices in the market by as much as 50%.
But Dorety is optimistic even as big losses over the past two years – $77 million each year – have pushed the credit union’s net worth down to below the 6% mark, to 5.9%. “This is very much what we had anticipated for the first half of the year,” he told Credit Union Journal last week. The decline in net worth has prompted Suncoast Schools to shrink its asset base to rebuild capital – it was as big as $6.2 billion as recently as June 2008 – and to cut back its workforce. Dorety said he is proud he was able to do so without laying anybody off and keeping all branches open.
For now, Suncoast Schools, which planned a now-abandoned merger with GTE FCU last year, is not seeking a partner, according to Dorety. “Now is not the time to be looking at a merger,” he said.
