Bethpage Merges Montauk.
Byline: Peter Strozniak
Montauk Credit Union, which was placed into conservatorship because of its financially troubled taxi medallion loan portfolio, was merged into the $6.2 billion Bethpage Federal Credit Union in Bethpage, N.Y., the NCUA announced Thursday.
"We evaluated the portfolio and we believe we will be able to manage and work with the borrowers to get them back into a position where they can repay," Bethpage Senior Vice President of Corporate Affairs Linda Armyn said. "We realize we will experience some losses."
Armyn described the loan loss as big but declined to provide specific numbers.
"I don't think we want to disclose that at this time," she said.
Last year the $162 million Montauk, located in New York City, posted a $17.6 million net loss according to NCUA financial performance reports. It was critically undercapitalized with 1.74% net worth and reported an ROAA of -10.74% as of year-end.
Of the credit union's 683 member business loans valued at $163 million, 135 were classified as troubled debt restructured loans that totaled $33 million, according to Montauk's December 2015 call report. In addition, the credit union reported 183 delinquent loans that were valued at about $40 million.
Outside of serving members who hold taxi medallion loans, Armyn said Bethpage has no plans to offer new taxi medallion loans.
Even though Bethpage is expected to take a substantial loss because of the Montauk merger, it also gains its first foothold in New York City.
Montauk's 111 West 26th Street location will remain open and will be developed into a full service branch. Montauk's six employees at the branch were offered Bethpage positions, Armyn said.
In addition to Montauk's 2,830 members, Bethpage's field of membership expands to about one million potential members. The Long Island-based credit union serves 277,429 members.
"Bethpage is eager to provide Montauk's members with the great value and service our members experience today," Bethpage President/CEO Wayne N. Grosse said in a prepared statement. "We are also excited to offer greater credit union access to our membership."
In February, the NCUA and the New York Department of Financial Services solicited merger bids for Montauk,
The rising popularity of app-based ridesharing services such as Uber and Lyft have caused financial woes for credit unions that serve the tax medallion industry.
Three other New York-based credit unions -- the $273 million, LOMTO Federal Credit Union in Woodside, the $1.9 billion Melrose Credit Union in Briarwood and the $665 million Progressive Credit Union in New York City -- saw their income decrease and provisions for loan losses increase in 2015 as the tax medallion industry they serve struggles to survive economic and technological changes.
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|Publication:||Credit Union Times|
|Date:||Mar 31, 2016|
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