Who’d have thought Melrose Credit Union could offer some of the best CD rates in the country because it’s developed a lucrative business putting those deposits to work financing New York cabs?
Not the actual cars, but the municipal licenses that those taxis must have to pick passengers up on city streets.
Those licenses are the 6-inch aluminum medallions that are permanently attached to the hood of all 13,200 legal taxis.
They can be bought and sold through city-approved brokers and currently cost about $575,000 for an individually-owned cab and $750,000 for a fleet cab.
Melrose finances more of those purchases than anyone else, marketing director Robert Nemeroff told us when we sat down with him at the credit union’s office in Queens last week.
Here’s how he says Melrose works, why it can offer savers some of the best nationally available CD rates, and what it has planned for the future.
Bankaholic: According to your Website, the state charter you have from New York allows basically anyone, regardless of affiliation or geographical location, to become a member.
Nemeroff: That’s correct. We have an open charter. We’ve had that since 1922. So, essentially anyone can join our credit union.
Bankaholic: What kind of investments is the credit union making that allows it to offer such great rates?
Nemeroff: Well first of all, because credit unions are not-for-profit, we answer to our members. We don’t answer to stockholders.
So that means that after expenses, after our bottom-line expenses are paid, salaries, you know, and the cost of doing business on a day-to-day basis, the monies, the balance of proceeds, the balance of the revenues, the balance of the profits go back into…dividends. So, that means we’re able to offer higher savings yields and lower loan rates.
Bankaholic: What kind of investments do you make to earn a profit?
Nemeroff: Melrose is the No. 1 yellow taxi medallion lender in New York City and we have been since the beginning of time — taxi medallion time, that is.
Because the value on medallions is high, due to the supply and industry both being highly regulated and scrutinized, our medallion loans generate a significant, steady revenue stream, which, in turn throws off substantial profit, which enables us to offer high-yield share products and low-rate loan products.
Even our medallion loans are competitively lower than our competition.
Bankaholic: Does Melrose have any plans to open more offices in other parts of New York?
Nemeroff: With the advent of technology and the availability of electronic services, it’s not as vitally important to construct brick and mortar as it used to be.
We are members of two nationwide networks.
One is a nationwide ATM network, which is the CO-OP network. That includes 5,500 ATMs at 7-Elevens across the country, as well as ATMs at other credit unions and other institutions that have the CO-OP network label on them. And what that means is that if you’re a member of Melrose, with either your Melrose ATM or debit card, you can use that co-op machine, surcharge free.
The second network is called a “shared branch network.” It’s credit union service centers. If you go to our Website, and you go to the drop-down from the home page tab, and you choose services, and you click on the link for “Shared Services Centers,” what those are, are brick-and-mortar facilities of other credit unions.
We are included in that network. So any participating credit union in that network can send their members to any other credit union that participates. And basically, that’s a branch of that credit union.
So there are credit unions in the network in just about every state in the country. So, a member of Melrose that’s vacationing in Florida can walk into one of the participating credit unions in Florida and go in there and use it like it’s a branch of Melrose.
Bankaholic: How fast is Melrose growing? On the Website it says 20,000 members.
Nemeroff: Yes, the membership is up to about 22,000 and change now. You know, we believe in a philosophy of controlled growth. And obviously that bodes well for credit unions in general. It’s slow and steady wins the race.
There’s no reason to go out there and make as much as you can off of people today. If you do the right thing by people today, you’ll have them as members…for the rest of their lives because they’ll appreciate the fact that you serviced them the right way from day 1. So that’s our philosophy, that’s our motto.
By doing it that way, we don’t have to worry about bringing in hundreds of thousands of new members on an annual basis, but we’re bringing in the business. We’re bringing in the mortgage loans, we’re bringing in the share certificates, which are the CDs, we’re opening up new accounts, and we’re doing it the right way. And I think people appreciate that no matter where they’re from.
We’ve had to turn people away from a loan because they just weren’t ready, financially, to take on that responsibility, but they appreciate the fact that, you know, we tell them, “Listen, you can go to a bank and they’ll turn around and charge you an exorbitant amount of interest on a loan that you want to take out to buy a house, but what good is that? You’re not going to be able to make the payments and then they’re going to foreclose on you, and, you know, that’s not the idea.”
The idea is to help someone get ahead. The idea is to make sure that they can fit into the loan that you’re providing them.
Bankaholic: Where are the 22,000 Melrose members from?
Nemeroff: About 75% to 80% live in the New York metro area and 10% are in Florida and California. The remainder is spread out across the country.