Pentagon FCU has acquired the Manhattan-based Progressive CU through a merger. The merger took effect Jan. 1.

The merger with PenFed, which was approved by Progressive CU board members, occurred as Progressive faced the same challenges that continue to pressure many credit unions that are heavily involved with taxi medallion lending. In a letter to their members, Progressive Treasurer/CEO Robert A. Familant, explained that despite maintaining a strong capital position, the board of directors at Progressive determined that a merger with PenFed was in the best interests of their members.

PenFed is the second largest credit union in the country with total assets of more than $24 billion.

According to Familant, PenFed will “support all of Progressive’s current members and current loans in the months and years ahead.” He also said that PenFed will retain all of Progressive’s staff.

Credit Union Times is reporting that PenFed will also retain all of Progressive’s loan portfolio, including its troubled medallion loans.