BRIARWOOD, N.Y.—Massive losses from bad taxi medallion loans have wiped out the net worth of Melrose Credit Union, reports one analyst.
As CUToday.info reported, due to the impact of ride sharing services on taxi-medallions in this city, medallion-lender Melrose CU was placed into conservatorship on Feb. 10, 2017.
The $1.49-billion credit union reported a loss of almost $178.4 million as of Sept. 30, 2017. The loss arose from an increase in provision for loan and lease losses. Year-to-date provision for loan and lease losses was $178.2 million with $116.3 million increase during the third quarter, reported Keith Leggett, the former senior vice president and senior economist at the ABA, on his Credit Union Watch blog.
“As a result of the massive loss, the credit union's net worth went from $102.2 million at the end of 2016 to minus $76.1 million as of third quarter of 2017,” said Leggett. “The credit union's net worth ratio was negative 5.10% -- meaning it was critically undercapitalized as of the most recent Call Report.”
Loans 60 days or more past due were $668.5 million as of September 2017. Loans 360 days or more past due were approximately $424.7 million – up from $111.9 million from the previous quarter and $366.9 million from a year ago, Leggett said.
The credit union was also reporting that $37.8 million in loans were in the early stage of delinquencies (30 to 59 days past due). The delinquency rate on loans was 40.01%, up from 37.85% as of June 2017 and 24.12% as of September 2016, Leggett said.
Due to the increase in provision for loan and lease losses, the allowance for loan and lease losses rose from $210.3 million as of June 2017 to $326.5 million.
“However despite this increase, the credit union's loan loss reserves are underfunded with a coverage ratio of 48.83% as of September 2017,” Leggett said.
Falling medallion prices have impacted several Big Apple CUs. In addition to Melrose, NCUA in June placed medallion lender LOMTO FCU, Woodside, N.Y., into conservatorship. In September of 2015, taxi medallion lender Montauk CU was conserved. It was later merged into Bethpage FCU.