The NCUA liquidated Melrose Credit Union Friday after the New York credit union lost $744.6 million over the past three years as its taxi medallion loans soured.
The New York State Department of Financial Services placed Melrose into conservatorship on Feb. 10, 2017, and named the NCUA as conservator. At that point, its losses over the previous 30 months were $282.6 million. It lost another $290.2 million in 2017, and $171.8 million in the first half of 2018.
“The NCUA made the decision to liquidate Melrose and discontinue its operations after determining the credit union was insolvent and had no prospect for restoring viable operations,” NCUA said in a brief statement released 5 p.m. on the start of the three-day Labor Day weekend.
The liquidation of Melrose CU of Briarwood, N.Y. ($1.1 billion in assets, 19,864 members) is among the largest in NCUA’s history. Most of its liquidations involve small credit unions. The four other liquidations this year involved credit unions with assets ranging from $140,000 to $86 million.
The NCUA news release said Teachers Federal Credit Union of Hauppauge, N.Y. ($6.1 billion in assets, 300,541 members) “immediately assumed all of Melrose’s members and shares as well as some loans and other assets.”
Melrose was the largest holder of taxi medallion loans among credit unions, which the NCUA includes in its category for non-farm commercial loans not backed by real estate. The city began issuing the medallions in the 1930s to regulate the taxis and help drivers earn a living wage. The medallions were used as collateral for loans, but the rise of Uber, Lyft and other ride-sharing services caused their value to drop from a high of $1.3 million in 2011 to $181,000 in June.
At the end of 2017, Melrose had $993 million in non-farm commercial loans not backed by real estate, with 46.4% delinquent by at least 60 days. Net charge offs were 19.7% of that loan class.
By June 30, the loan class has shrunk to $823.9 million, with $348.4 million, or 42.3%, delinquent. Net charge offs were $141.5 million, or 17.2%.
NCUA declined to comment on the amount and types of loans it retained or the amounts of any charge offs that occurred since Melrose’s June call report.
“NCUA’s Asset Management and Assistance Center is managing the portfolio of loans not assumed by Teachers Federal Credit Union. While that process continues, there are no specific figures available,” NCUA spokesman John Fairbanks said.
The existing Melrose office located at 13930 Queens Blvd., Briarwood, in Queens will remain open.