New Jersey Credit Union Plans Merger With PenFed

The $425 million McGraw-Hill Federal Credit Union in East Windsor, N.J. announced it is proposing to merge with the $24.2 billion Pentagon Federal Credit Union in McClean, Va., the New Jersey Credit Union League reported Tuesday.

MHFCU has scheduled a special meeting for members to vote on the proposed consolidation on March 11 at the AMA Executive Center in New York.

MHFCU Board Chair Mary Herzich explained in a letter to the 23,869 members that the credit union believes the membership will be best served by a merger with PenFed, the New Jersey league reported.

“In evaluating strategic alternatives, we determined a merger with a credit union of larger scope, scale and similar culture and commitment to member value is the answer,” Herzich wrote in a letter obtained by the New Jersey league.

Last July, the MHFCU board approved a merger resolution that authorized executives to seek regulatory clearance from the NCUA and approval from MHFCU membership to approve the consolidation.

Chartered in 1935, MHFCU originally served employees of the McGraw-Hill Companies in New York City. Since then, the credit union has opened up membership to outside companies and now has more than 120 businesses and organizations in its field of membership.

MHFCU is New Jersey’s fifth largest credit union that manages nearly $45 million in capital, operates two branches and employs 62 staff members.

If approved by MHFCU members, the merger will represent PenFed’s second consolidation this year.

On Jan. 1, the NCUA approved an emergency merger of the financially troubled $382 million Progressive Credit Union in New York with PenFed.

PenFed chose to keep all of Progressive CU’s loans including its taxi medallion loans, which led to Progressive’s heavy financial losses.

Progressive posted a net income loss of $102 million at the end of 2018, according to NCUA financial performance reports.