Briarwood, N.Y.-based Melrose Credit Union has announced the appointment of Steven Krauser as interim CEO while the CU seeks a permanent chief executive after having fired former CEO Alan Kaufman.
Krauser, who held the position of SVP retail operations prior to the appointment, steps into the top spot as the credit union is still dealing with significant delinquencies in its taxi medallion loan portfolio, which has been a side casualty of the advent of ride-sharing apps such as Uber and Lyft
According to the CU, Krauser will begin taking the credit union "in a new direction," which will focus on other lending and investment products. They noted medallions will still be "prominent" in the CU's portfolio.
Melrose CU has struggled to maintain safe and sound practices as the taxi industry has faced massive disruption by ride-sharing and ride-hailing applications. Melrose's portfolio consists of $1.5 billion in taxi medallion loans, according to court documents. This has painted a worrying outlook for the credit union, which increased their Allowance for Loan and Lease Losses (ALLL) by 238% to $230 million from September 2015 to December 2015.
Melrose pointed out their entire member deposits are insured by the NCUA when announcing the change. "[Krauser] is working with regulators and insurers to protect Melrose Credit Union's 26,000 members and help the credit union grow soundly and diversify," the CU said.
Prior to his time with Melrose, Krauser had previously worked for Sterling National Bank and Signature Bank and has "extensive management experience in the private sector," as well, the CU said in a statement.
Taxi Medallion Woes
Melrose CU and two other New York-based CUs — Progressive CU and LOMTO FCU — are involved in a contentious court battle against the City of New York and the NYC Taxi & Limousine Commission (TLC) for losses incurred through allowing ride-share/hail applications to operate in the city.
In the lawsuit, plaintiffs allege a poor regulatory structure has caused significant detriment to the traditional taxi structure. "Defendants' deliberate evisceration…has and continues to inflict catastrophic harm on this once iconic industry," the lawsuit stated.
Average Yellow cab trips per-day in the city dropped nearly 25% from May 2013 to October 2015; with daily revenue fitting a similar trend decreasing from around $600/day in June 2013 to around $480/day in October of 2015, according to TLC data.
Montauk CU, which was located only a short drive from Melrose, had recently been forced to merge into Bethpage FCU, Bethpage, N.Y., because of heavy losses incurred due to involvement in the taxi industry. The $162 million institution went into conservatorship in late 2015 and was merged with the $6.6 billion Bethpage FCU just six months later.
The NYC TLC has attempted to level the playing field by releasing multiple e-hail applications into the yellow cab market. Some worry the efforts are too-little-too-late as Uber and other applications have a sizeable head start.
