Pentagon Federal Credit Union (PenFed), headquartered in McLean, VA, has acquired distressed taxi medallion lender Progressive Credit Union (New York, NY) in an emergency merger.
With this merger, the four New York City credit unions that specialized in financing taxi medallions -- LOMTO, Melrose, Montauk, and Progressive -- are no longer in existence.
Under an emergency merger, the National Credit Union Administration “may approve an emergency merger without regard to common bond or other legal constraints” for credit unions at risk of insolvency.
This merger will permit PenFed to serve anyone in the country; because Progressive had an open charter granted by the state of New York.
Progressive in recent years has been adversely impacted by loans to finance New York City taxi medallions, whose value has plummeted due to the rise of ride-share companies Uber and Lyft.
PenFed will now absorb those problem taxi medallion loans.
According to the most recent call reports, PenFed had $24.1 billion in assets, while Progressive had almost $383 million in assets.
The effective date of the merger was January 1, 2019.
The American Bankers Association EVP Ken Clayton stated: "Congress should look no further than this combination to quickly see the fiction that large credit unions have become."
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Seems like a decent way to help a struggling Credit Union to me. I suppose the ABA would rather the CU fail and have losses absorbed by the NCUSIF?
ReplyDeleteProgressive could have explored merging with Bethpage, which acquired taxi medallion lender Montauk thru an emergency merger. Montauk had an open charter.
DeleteI don't know if Bethpage was interested in merging with Progressive.
PROGRESSIVE LOST 103 MILLION IN 2018, THEY WERE LUCKY TO GET PENFED
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