MELBOURNE, Fla.-What was once the biggest failure and conservatorship of a natural person credit union, is now, through the miracle of merger, the third largest credit union in Florida.
On the heels of the conservatorship of the once high-flying Eastern Financial Florida CU, Space Coast CU rocketed in to the rescue with a marriage proposal that creates a CU with more than 360,000 members, $3.2 billion in assets, and a network of more than 60 branches and 145 ATM locations throughout the Sunshine State.
With the merger getting the final approval June 19, Space Coast, which is headquartered about 100 miles north of Eastern Financial's former headquarters in Miramar, will operate in the southern market as "Eastern Financial Florida Credit Union, a division of Space Coast Credit Union."
As a result of the merger, Space Coast CU has doubled its membership, branch and ATM network, and asset holdings.
The challenge now: integrating the various operating systems for the two CUs, a process that is expected to take one year, said Meredith Gibson, SVP-marketing.
"The actual process of merging is the integration," she said. "Until the two systems are integrated, memberships of the credit unions will be confined to using the branches and ATMs in the existing locations."
In the meantime, Space Coast CU is mapping out the products that the two credit unions currently offer, and making adjustments to make sure all the products will be offered throughout the newly consolidated CU, and that the products will all look alike. At this time, products and services are available in the market areas where they were offered prior to the merger. For example, a new member opening an account in Melbourne will be able to select from the products and services offered by the Space Coast CU division, and a new member in Miami would select from the EFFCU offerings.
Gibson said there have been "some layoffs - mostly at the back end. We will continue to assess what work needs to be done."
"This is a partnership of two like organizations," said Doug Samuels, Space Coast CU's president/CEO. "Both credit unions have grown up with Florida."
East Coast Financial CU began in 1937 as the credit union for employees of Eastern Airlines. Space Coast CU was founded in 1951 as Patrick Air Force Base CU serving employees of the Space Program.
The difference, and the driving force behind the merger, was the financial condition of the CUs. Several months prior to the merger, Eastern Financial's net worth had been depleted, primarily as a result of problems associated with several large commercial loans and investments. "The core membership was active, new members continued to join, and there was strong use of their checking and debit card offerings, but the low net worth restricted their ability to lend to members," said Tom Baldwin, Space Coast CU's CFO. "This made it difficult for Eastern Financial to work its way out of the negative financial position."
Making the decision to merge was studied carefully, Baldwin stressed. "We carefully evaluated Eastern Financial's operation prior to submitting the application to merge, and we expect to remain adequately capitalized at the time of the merger."
Baldwin said the decision to merge was based on the answer to one simple question: Would acquiring Eastern Financial provide a long-term benefit to Space Coast's members?
"We felt the answer was 'yes,' as we had the net worth to work through the short term, and the operating efficiencies to ensure that the combined entity would be stronger in the long term than staying as we were," Baldwin said. "The increased size and strength will allow us to be more competitive in the marketplace and ensure that we are here for the members well into the future."
