PenFed announced Wednesday that it has acquired Progressive Credit Union, a New York City-based credit union that has suffered heavy losses because of its taxi medallion loans.
The NCUA approved the emergency merger, which became effective Jan. 1. Progressive ($382.8 million in assets, 2,897 members as of Sept. 30, 2018) lost $69.5 million in the 12 months ending Sept. 30, up from a $65.5 million loss for the preceding 12 months.
PenFed ($24.1 billion in assets, 1.7 million members as of Sept. 30) chose to keep all of Progressive’s loans including its taxi medallion loans. James Schenck, president/CEO of PenFed, valued the taxi medallion loans at about $290 million, saying they accounted for essentially all of Progressive’s commercial loans not backed by real estate, a portfolio that stood at $285.8 million at the end of the third quarter.
The taxi medallion-backed loans were also the main force behind Progressive’s overall poor loan performance. As of Sept. 30, 24.8% of its total loans were at least 60 days delinquent, compared with delinquency rates of 0.67% for all federally-insured credit unions. Progressive’s net charge-off rate was 10.1%, compared with 0.57% nationally.
PenFed’s delinquency rate was 0.65% at Sept. 30, and its net charge-off rate was 0.65%.