In a recent Long Island Business News article, New York Credit Union Association President/CEO William J. Mellin and credit union leaders discussed industry trends and credit union consolidation on Long Island.
The article highlights five credit unions in the region that have been acquired by larger institutions in recent months: Teachers FCU’s acquisitions of LOMTO FCU, Melrose CU and Projector FCU; Island FCU’s acquisition of Bay Ridge FCU; and Suffolk FCU’s acquisition of Long Island Community FCU.
The recent consolidation deals are part of an ongoing trend that has seen credit unions being acquired by larger credit unions, explained Mellin.
“Going back over the last 10 years or so, we have been losing about 10 to 12 credit unions a year in New York state,” Mellin told the paper. “When you look back 20 years, there were about 700 credit unions.”
Mellin highlighted two main reasons for the ongoing industry consolidation: “Their CEO may be retiring, and they’re having difficulty replacing him or her,” he said. “And since the recession and the Dodd-Frank Act, there has been a greater regulatory burden, which does not differentiate between a $1 billion shop and a $10 million shop, and sometimes it’s not financially feasible for smaller institutions to move forward and survive because of it.”
It’s also noted, however, that several of the merged credit unions had sizable New York City taxi medallion loan portfolios. As has been reported extensively, the taxi industry has experienced extreme disruption as a result of ride-hailing companies like Uber and Lyft, which has created a ripple effect felt throughout the medallion industry.
“[T]alk about disrupters,” Robert Allen, CEO of Teachers FCU, is quoted as saying in the paper. “Uber came in and in a short period of time the valuations have dropped substantially. It has been a disaster.”
Also quoted in the article was Bret Sears, president and CEO of Island Federal, who explained that their acquisition of Bay Ridge FCU will benefit their members. “Bay Ridge was strong in commercial lending, which we did not have before, and we can now offer that expertise to all of our members,” he said. “Our Brooklyn members now have a physical location that they can come to, and we are looking to expand out of that Brooklyn base.”
To view the full article, visit the LIBN website (login required).