Suncoast Schools / GTE Merger

Here is an article that will appear in the Tampa Bay Business Journal this Friday (March 6, 2009)

The boards of directors of two of the biggest credit unions in the United States, and the two market leaders in the Tampa Bay area — Suncoast Schools Federal Credit Union and GTE Federal Credit Union — have signed a letter of intent to merge the two credit unions.
If finalized, it would be the biggest merger ever of two credit unions, according to the Credit Union Journal , a trade publication.

Tom Dorety, president and chief executive of Suncoast Schools, and Wendall “Bucky” Sebastian, chief executive of GTE, said the proposed merger is subject to satisfactory due diligence review and regulatory approval. A final decision on whether to go ahead with a merger is still months away, Sebastian said, as the boards of each credit union review financial information and develop a business plan. If regulators approve, GTE members also would likely be asked to ratify the plan.

No decision has been made on a name or management for a combined organization, Dorety said. The letter of intent came after exploring the value of a merger to members.
“It provides them immediately with greater access to services. It enables us to have more resources to deliver products and services to members, and to do expansions more quickly in the future,” Dorety said.

While some economies of scale would result, no layoffs or branch closing are expected. The footprints of the two credit unions are unique with GTE stronger to the north and east of the Bay area and Suncoast stronger to the south of the Bay area. There are a few branches within a couple of miles of each other, but those happen to be each credit unions’ busiest branches, Dorety said. “What we expect is the combined entities will have more ability to grow,” Sebastian said.

Losses played no role

Combined, the two credit unions would have $7.8 billion in assets, based on their assets as of Dec. 31, and nearly 675,000 members, according to reports filed with the National Credit Union Administration. The combined organization would be the 5th largest credit union in the United States, Sebastian said.

The merger comes on the heels of each of the credit unions’ huge 2008 financial losses in the fallout from the mortgage meltdown and credit crisis. Suncoast Schools lost $76.7 million and GTE lost $27.5 million last year, reports filed with the NCUA said.

The losses did not play a role in the merger discussions, both executives said.
“If these were boom times, I think we would still be talking about this and making the same decision,” Dorety said.

Credit unions nationally reported a consolidated loss of $2 billion for the fourth quarter, the first quarterly loss ever for the industry, the NCUA said.

Suncoast, with $5.9 billion in assets and 471,441 members as of Dec. 31, is the seventh largest credit union in the United States. Headquartered in Tampa, it operates 50 full-service branches in 15 Florida counties.

GTE, with $1.9 billion in assets and 203,376 members as of Dec. 31, also is headquartered in Tampa and operates 38 branches in Florida, one in Louisiana and one in Maine, according to its Web site.