BROOKLYN, N.Y.—Bay Ridge Federal Credit Union became undercapitalized during the second quarter of 2018 due to losses arising from taxi medallion loans.
The declining prospects for CUs making taxi medallion loans have been reported in CUToday.info several times this week, including here.
The $183-million credit union reported a mid-year loss of almost $4.9 million. In comparison, the credit union recorded losses of $2.3 million for the prior quarter and $2.1 million from a year ago.
The mid-year loss arose from an increase in provision for loan and lease losses of almost $6.1 million, up from $3.1 million for the first quarter of 2018, reported Keith Leggett, the former senior vice president and senior economist at the ABA.
Due to the second quarter loss, the net worth for the credit union fell by 20.3% during the quarter to $9.8 million. As of June 2018, the credit union was undercapitalized with a net worth ratio of 5.36%.
Delinquencies Top 7%
“At mid-year, the credit union had almost $68.4 million in commercial loans not secured by real estate. Presumably, many of these loans were to finance taxi medallions,” Leggett said.
As of June 2018, the credit union reported $12.1 million in delinquent loans, of which $9 million were commercial loans not secured by real estate.
Bay Ridge's delinquency rate was 7.12% as of mid-year 2018. The delinquency rate on commercial loans not secured by real estate was 13.16%, noted Leggett.
“In addition, troubled debt restructured (TDR) commercial loans not secured by real estate was $19.8 million. Almost $4.8 million of these TDR loans were 60 days or more past due. This means that 24.12% of these loans are delinquent,” Leggett said.
Net charge-offs were $2.8 million, of which $2.3 million were participation loans. Net charge-offs of TDR commercial loans were $1.383 million.
The credit union increased its allowance for loan and lease losses during the second quarter from $7.45 million to $9.66 million. The credit union's coverage ratio fell from 193.09% as of March 2018 to 79.77% as of June 2018, said Leggett.