TAMPA, Fla. – The recession isn’t expected to fade soon, at least not among executives at the dozens of area credit unions reporting large losses for the fourth quarter and all of fiscal 2008.
"I think it has stopped getting worse, and that’s the first sign of a turn-around," said Bucky Sebastian, president of GTE FCU, which this week reported a $27.5 million loss for last year. But, with the region’s unemployment rate quadrupling to 8% in the past three years, a recovery is still over the horizon, he suggested.
"We made good loans to good members in good conditions," Sebastian told The Credit Union Journal, "unfortunately, those conditions have changed." He said the poor economy and the lay-offs have pushed his credit union’s delinquency ratio and charge-off ratio to about 2%.
"We expect more losses in the first quarter and the second quarter," said Tom Dorety, president of Suncoast Schools FCU, which reported a $25 million loss for the fourth quarter and a $76.7 million loss for the year. "We hope southwest Florida bottoms out in 2009."
For executives at dozens of other credit unions on the Gulf Coast and elsewhere in Florida the real estate bust has taken a particularly heavy toll. "It’s all consumer loans," said Dorety, whose $6 billion credit union is the state’s largest. He pointed to a declining regional economy, lay-offs and diminishing real estate values as the main culprits for his credit union’s problems.
Both credit union giants have taken proactive steps which include moving additional millions of funds into loan loss reserves, reducing workforce and other expenses. Suncoast Schools reduced 90 staff positions last year and has no new branches planned. GTE cut staff by 60 positions last year.
The red ink was spread around broadly in the Sunshine State in 2008. Bay Gulf FCU reported a $4.4 million loss; McCoy FCU had a $4 million loss for 2008; Tropical Financial lost $4.3 million; Sarasota Coastal FCU reported a $2.7 million loss for 2008; First Florida a $1.9 million loss; Grow Financial CU a $2.8 million loss; Keys Financial FCU a $1.8 million loss and Insight Financial FCU a $1.1 million loss.
