Bethpage FCU Merges With CU Hit by Taxi Medallion Losses
New York’s largest credit union by assets, the $6.8 billion Bethpage Federal Credit Union, said Friday it will merge with the $118 million Northwell Health Federal Credit Union, which serves the Empire State’s largest health care system and the state’s largest private employer.
However, Northwell Health FCU lost $2 million last year because of several taxi medallion participation loans, according to Bethpage. What’s more, Northwell Health FCU President/CEO JoAnn Doyle stepped down Friday after nearly 29 years of service at the Jericho-based credit union.
In March 2016, Bethpage FCU merged the Montauk Credit Union, which was placed into conservatorship because of its financially troubled taxi medallion loan portfolio.
Other New York-based credit unions that have large taxi medallion loans, including the $1.7 billion Melrose Credit Union, the $591 million Progressive Credit Union and the $236 million LOMTO Credit Union have collectively lost millions because of the declining valued of taxi medallions brought on by competitive pressures from app-based ridesharing services such as Uber, Lyft, Gett and Via.
“The (Northwell Health FCU) loss for 2016 was the result of recognizing the decrease (of medallion) values and anticipated losses in the medallion portfolio,” a Bethpage spokesperson said.
NCUA approved the voluntary consolidation April 28, which will take effect at the end of business Friday. Northwell Health FCU members approved the merger May 17.
The merger means 18,005 Northwell Health FCU members will increase Bethpage’s total membership to 329,221, slightly lower the 340,134 members served by the $6.2 billion ESL Credit Union in Rochester, New York’s second largest cooperative.
The merger will also give Bethpage opportunities to attract new members from Northwell Health system’s pool of 61,000 employees who work at 21 hospitals, 550 ambulatory and physician practices and two medical schools.
“Now, with our expanded charter, Bethpage has the ability to serve Northwell Health and support its growing initiatives as we both continue to expand and improve the communities in which we serve,” Wayne N. Grossé, president/CEO of Bethpage FCU, said in a prepared statement.
Although Northwell Health FCU is well capitalized posting a net worth of 11.35% in December 2016, it also recorded a net income loss of $2,083,079, according to its NCUA financial performance reports. While, the credit union’s net income gains increased from $398,072 in 2012 to $556,009 in 2014, its net income fell to $210,286 in 2015.
Over the last five years, Northwell Health FCU’s delinquent loan rate increased from 1.88% in 2012 to 4.14% in 2016. By the end of this year’s first quarter, its delinquency rate shot up to 6.63%, according to NCUA financial performance reports.
While the credit union’s allowance for loans and lease losses held steady in the range of $443,991 to $484,535 from 2012 to 2015, it posted $2,495,562 in ALLL last year and an ALLL of $2,479,306 at the end of March 2017, according to NCUA financial performance reports.
Northwell Health FCU’s ROAA has declined from 0.40% in 2012 to -1.82% in 2016. At the end of this year’s first quarter, its ROAA was 0.46%.
"While the Northwell Health Federal Credit Union has served our employees well for many years, we are very excited about the merger with Bethpage Federal Credit Union," Joseph Moscola, senior vice president and chief people officer for Northwell Health, said in a prepared statement. "Bethpage is a trusted financial partner and we believe the merger will allow us to further meet the needs of our employees, and the communities we serve."
Northwell Health FCU had 17 full-time employees. Because of several retirements and two employees who left during the merger process, 12 employees will join Bethpage. Northwell Health FCU’s branches in Manhasset and Jericho will remain open, according to a Bethpage FCU spokesperson.