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Melrose Credit Union Placed into Conservatorship Under the NCUA


The New York State Department of Financial Services (DFS) today took possession of Melrose Credit Union this afternoon and appointed the National Credit Union Administration (NCUA) as conservator. It’s important to note that this isn’t a closure of Melrose Credit Union. The NCUA explains what the conservatorship means in its press release and in this FAQs document. Below is an excerpt from the FAQs:

A conservatorship means NCUA has assumed control of Melrose Credit Union to ensure its financial stability and safe-and-sound operation. In a conservatorship, NCUA works to address issues related to a credit union’s operations and financial condition while maintaining member services.

The NCUA also states that members can continue to conduct business at the credit union. Melrose Credit Union will remain open during the conservatorship. The long-term future of Melrose is uncertain as explained in the FAQs:

NCUA has assumed control of Melrose Credit Union to resolve operating issues with the goal of protecting member assets and seeking a resolution to identified problems. NCUA has made no decisions about the long-term future of the credit union; however, continued service to members is a priority.

I have never seen the NCUA make clear about the impact to uninsured deposits when a credit union is placed into a conservatorship, and that is continuing with the Melrose conservatorship. The NCUA just has this basic line that deposits remained insured:

Yes, member accounts at Melrose Credit Union remain safe and fully insured up to the maximums established in federal law.

Based on what I’ve seen with past conservatorships, members keep access to all of their deposits, even deposits over the insured limits. However, one possible outcome of a conservatorship is liquidation of the credit union, and when a liquidation occurs, members may lose uninsured deposits. Thus, Melrose members should immediately ensure that all of their deposits are under the NCUA coverage limits.

Another possible outcome of a conservatorship is that the NCUA arranges for the credit union to be merged into a larger and stronger credit union. That may be difficult for Melrose since it has almost $2 billion in assets. Only nine credit unions based in New York State are larger.

The third possible outcome is for the NCUA to make changes to Melrose so that it becomes financially healthy again. That may be difficult due to its large exposure to the New York taxi industry which is under pressure from Uber and other app-based ridesharing services. This 2015 New York Post article has more coverage on how the troubled New York City taxi industry was affecting Melrose and other credit unions.


  |     |   Comment #2
Melrose has many loans out for NYC taxi Medallions. Since lift and Uber came out the values of the medallions has dropped greatly. It wasn't a matter of if than when.
  |     |   Comment #7
When you take more money out like salary and bonuses, there is no money left to pay the accumulated interest on the maturing CDs and hence conservatorship.
  |     |   Comment #12
This was about bad loans not salaries and bonuses. Where did you get that from, Trump?
  |     |   Comment #16
Jimbeau, Please restrain yourself first, there are people around who know more than you do.
#7 is correct, when you look at Melrose financial statement for the last 3 years, it clearly states that they withdrew
$75.6 millions to pay their own salaries and bonuses from the line of credit they had.
Very few of the loans are bad or in default, they have few late payers and that is all.

Bad management and bonuses destroyed the CU, same as Valor.


Look after page 4, please, everything is disclosed line by line of all expenses and operations.
  |     |   Comment #17
For some reason your web site is blocking the PDF file, please download it from here:
In the name field type Melrose and then click on find.
At the bottom on the right is the PDF file.
  |     |   Comment #18
According to the last call report that I could find, Melrose has over 500 million dollars in delinquent loans. That hardly jives with your statement "very few of the loans are bad or in default". As far as you other statement "Please restrain yourself first, there are people around who know more than you do." Apparently, you're not one of them.
  |     |   Comment #8
I feel bad for them, but my first thought is to pull my CD. Does anyone plan to leave their CD's and just ride it out?
  |     |   Comment #9
If you close your CD you may have to pay an EWP. As long as you are under the maximum limit for insurance coverage you are covered. If they are merged later with another CU the rate on your CD my drop but you will have the option to close. If the NCUA closes them down you will get a check within a week.
  |     |   Comment #21
I wish that were true. I had 5 CDs with Melrose. Once I heard about their liquidation, I had to jump through hoops, finally filing a complaint with the NCUA to get 2 of my CDs cashed out and sent to me. Now I am still waiting for the other 3 CDs to be "investigated" by the Executive Assistant Manager. It has taken me 3 months of working on this to get my money out. And now that TFCU has taken them over, you can't even get into your Melrose account online. There is nothing on TFCU's website that even allows a Melrose member to sign in, so basically, you are at the mercy of Melrose and if you try to call them, good luck with getting someone to pick up the phone or to call you back if you leave a voice message.
I don't understand how the state of New York can allow such horrendous treatment of Melrose customers. I hope everyone reads this and files a complaint with the NY State Attorney General's office and the NCUA. That's what I did and still waiting for this to be resolved.
  |     |   Comment #22
Are you saying that all your CDs are below the NCUA insurance thresholds, and the credit union won't let you withdraw the funds even though you're willing to pay the EWP?
  |     |   Comment #10
account insured , if you try to pull it out ,you will be penalized,, if Melrose is taken over than you will have better options
  |     |   Comment #13
I plan on riding it out. The only people who should be panicking are those whose deposits are over the NCUA insurance limits.
  |     |   Comment #14
My only CD (relatively small) matures in May, so I'll ride it out. That's why we have federal deposit insurance.
  |     |   Comment #11
Panic time for Melrose CU members who don't understand how NCUA insurance works. Needless worry or fretting over what will happen next.
  |     |   Comment #15
Would this be a good time to open a CD at Melrose?
Mike Feynman
  |     |   Comment #19
So how does a credit union rated #25 on the 2015 Deposit Accounts list of Healthiest Credit Unions end up in conservatorship in 2 years. What use are the health ratings?
  |     |   Comment #20
"Melrose first became undercapitalized after its second quarter 2016 Call Report was released by the NCUA."

Read the full article in the link provided by cumulus, comment #6.

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