Regulators Cite Troubled Florida CU For Real Estate Reserves

State regulators have issued a cease and desist order against Bay Gulf Credit Union of Florida, forcing the one-time $217 million credit union that has been hit hard by the region's real estate bust to boost its allowance for loan losses. William DeMare, president of Bay Gulf, said the main focus of the supervisory order revolved around a disagreement on ALL calculation on loan modifications, especially with respect to debt restructuring in one of the most troubled real estate markets in the country. As a result, Bay Gulf added $850,000 to its ALL in December and restated its 2009 financials to show a $2.1 million loss for the year. "It's just huge," DeMare told the Credit Union Journal. "Our allowance for loan losses account is just such so significant in terms of the amount of our loans." The supervisory order cites Bay Gulf for operating without adequate polices for accounting for troubled debt restructures and loan modifications. Bay Gulf, which reported an $823,706 loss for the first quarter of 2010, has modified about 700 loans, according to DeMare. Of those 66% are still active, 14% have been paid off and 20% have been charged off. CUJ is an NMN affiliate.