ALEXANDRIA, Va. (4/27/09)—Temporary control of the daily operations of Eastern Financial Florida CU was assumed Friday by the National Credit Union Administration (NCUA). After the Florida Office of Financial Regulations, Bureau of Credit Union Regulation placed the credit union into conservatorship, the NCUA took over to assure continued service to the Miramar credit union’s 193,000 members and to ensure safe and sound operations of its 22 branches. “The federal regulator’s decision to step in and takeover the daily operation of Eastern Financial Florida Credit Union demonstrates that the regulatory system put in place to protect the members of our nation’s credit unions really works,” Credit Union National Association (CUNA) President/CEO Dan Mica declared Friday. CUNA statistics show that Eastern’s approximately $1.6 billion in assets places it as the 64th largest in the country—down from 48th in 2007. NCUA year-end figures show:
* Total equity is down to $10,096, nearly a 100% drop from previous quarter; and * Net income is negative -$133.4 million, a 143.4% decline from previous quarter.
The credit union also had significantly higher delinquency ratio (5.18%) and net charge-offs (4.18%) than its peer averages of 1.22% and 0.79% respectively. ROA is negative 6.54%. "Eastern’s takeover and the factors that precipitated it are not typical to the credit union industry as a whole. As a group, credit unions are conservatively managed, particularly as it pertains to their lending practices and the oversight of their loan portfolios,” Mica pointed out. He added: “As an industry our loan delinquency and charge off rates are climbing somewhat due to the difficult economy, but they are still well below those of commercial banks. In addition, as an industry the average capital-to-assets ratio of credit unions is about 10%, well above the industry standard of 7% for being “well capitalized." He also underscored that even in the current difficult economy, the country’s 8,000 credit unions are actively making loans to America’s consumers and small businesses. Federally insured credit union accounts are covered to at least $250,000 by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. government.