Sky-High Balances Send Progressive CU to the Top
Progressive Credit Union is so accustomed to landing at the top of lists, it was no surprise when the $670 million New York-based cooperative ranked No. 1 for largest share balance in 2014 among institutions over $20 million in assets.
“We’ve had that distinction numerous times,” Robert Familant, CEO and treasurer of the 4,000-member Progressive, said. “I know average share balance is a statistic that's often thrown around, but I’ve never really been a big fan of statistics based on the number of members.”
According to data analyzed by Callahan & Associates for CU Times, Progressive's average share balance was $74,291 as of June 30, 2014. Total shares topped the $293 million mark.
“We’re an open charter [credit union] in New York and we’re fortunate to have members that want to invest with us,” Familant said. “We have very little movement in our accounts. Many of our members are here because we’re paying better than average CD rates.”
Carrying a larger-than-average balance in share accounts can be cumbersome for some credit unions, but it doesn't bother Progressive, he noted.
“Having a large share balance is a result of not having many tiny accounts,” Familant said. “We’re not an employee group. So, we don't have that plethora of small deposits coming in and withdrawals going out.”
Progressive's average yield to depositors is one of the highest in the country, which makes its profitability even more remarkable, Familant added. Despite paying depositors a high rate of interest, the credit union remains profitable, according to its call report.
A number of factors have contributed to Progressive's high-ranked share balances including outstanding service, a proven pattern of savvy lending practices and the ability to build long-standing relationships with members, Familant said.
“Large share balances are not a drain on our balance sheet as we have loans totaling significantly more than shares,” he said. “Any credit union which has large or small share balances will have income [and] expense issues if they can't lend it out. That is not a problem for PCU.”
Progressive enjoyed a hefty 215% loan-to-share ratio with $631,334,579 in total loans outstanding and $293,004,582 in total shares, according to CU Times’ ranking for that ratio category.
“Because we make large loans, we don't have to have that many employees,” Familant said.
Decades ago, the credit union established a niche in taxi medallion financing in New York City, Boston and Chicago.
Taxicab drivers in most areas of New York City and many other large metropolitan areas must have a medallion to operate. In the Big Apple, there are currently about 13,500 taxicab medallion licenses, according to the city's website.
The average price of a NYC taxi medallion is currently $840,000, down from its peak of $1.05 million in June 2013, according to a Dec. 2 New York Times article.
The loans are very secure and have an extremely low delinquency rate, Familant said.
Years ago, Progressive began selling parts of the taxi loans through loan participations to other credit unions. The idea was conceived through necessity, he recalled.
As a state charter, Progressive had a lending limit of $1 million per individual based on its capital, which was significantly less than if it were a federal charter, Familant said.
With that lending cap, the credit union couldn't serve members who wanted to purchase more than one taxi medallion due to its cost, Familant said. Progressive came up with the idea of selling parts of loans to other credit unions.
The credit union currently has more than $1 billion in outstanding taxi medallion loans, but has sold close to $625 million of those loans in participations, according to Familant.
Loan participations provided many benefits for Progressive and participating financial institutions, he said.
Progressive's expertise is well-documented by its high capital, consistently high return on assets, low delinquencies and non-existent charge-offs, Familant pointed out.
“We’ve been developing that niche for years and working hard to ensure our members have access to all the products and services they need,” he said. “We want our members to know they are in safe hands.”
Progressive has also earned top spots in other CU Times’ rankings including for its outstanding efficiency ratio of 36.64% and its member business loan portfolio with $615 million in outstanding MBLs. (See stories on pg. 10 and 24).