CHICAGO—Credit unions in New York City that make taxi medallion loans have for several years been plagued by profitability issues related to sagging taxi medallion prices. Will Windy City CUs that make those loans now also face similar issues?
One analyst asserts trouble may be ahead in this city, noting that the latest medallion sales in Chicago indicate medallion values have fallen dramatically.
Keith Leggett, the former senior vice president and senior economist at the ABA, and author of the Credit Union Watch blog, noted that the City of Chicago reported that the average taxi medallion price for the third quarter of 2016 was $75,250. The median taxi medallion price was $67,500, he said.
“There were 12 transactions during the quarter. Taxi medallion prices ranged between $38,500 and $202,500. The 202,500 appears to be an outlier. In the third quarter of 2014, taxi medallion prices in Chicago ranged between $250,000 and $357,000 with an average price of $304,875. This would indicate that taxi medallion prices on average are down almost 75% from two years ago,” Leggett stated.
The taxi medallion prices in Chicago, however, are considerably less than those in New York City.
Leggett added that it is unlikely that medallion values in Chicago will improve after a recent decision by the 7th Circuit Court of Appeals. Judge Richard Posner rejected the taxi companies' arguments regarding ridesharing services, such as Uber, as anti-competitive, he said.
“This indicates that credit unions, which financed taxi medallion loans in Chicago, will face significant impairment charges on these loans,” asserted Leggett.
Falling medallion prices in New York City have led to problems among Big Apple CUs that make medallion loans. Montauk CU was conserved one year ago and later merged into Bethpage FCU. Recently, $1.9-billion Melrose CU signed a consent order from the New York State Department of Financial Services following a joint safety and soundness exam conducted by the Department and NCUA.