PURCHASE, N.Y.—Taxi medallion lender Quorum FCU posted a profit for the second quarter of 2018.
The credit union's net income was $2.24 million for the second quarter, after posting a loss of $2.74 million for the first quarter of 2018.
The improved financials come at the same time the City of New York has moved to put a limit on the number of Uber and Lyft drivers in the city. Ride-sharing services have significantly cut the value of taxi medallions.
As a result of the second quarter profit, the $829 million credit union's net worth rose to $66.8 million as of June 2018 from almost $64.6 at the end of March 2018. The combination of improved earnings and the shedding of almost $38.4 million in assets caused the credit union's net worth ratio to increase by 61 basis points during the quarter to 8.05%, reported Keith Leggett, the former senior vice president and senior economist at the ABA.
“The credit union has approximately $56.7 million in commercial loans not secured by real estate. Presumable most, if not all, of these loans were taxi medallion participation loans,” he said.
The credit union saw a 3.4% decline in delinquent loans during the second quarter to $41.3 million. But slightly more than 75% of all delinquent loans were participation loans, Leggett said.
The delinquency rate was basically unchanged at 5.88%.
High Delinquencies on TDRs
Troubled debt restructured (TDR) commercial loans rose by 1% during the quarter to approximately $23.8 million. The credit union reported that nearly $8.1 million of TDR commercial loans were 60 days or more past due. The delinquency rate on TDR commercial loans was 33.99%.
Net charge-offs were almost $10 million at the end of the second quarter, up from $6.9 million from the prior quarter. Net charge-offs of participation loans were $6.8 million as of the end of the second quarter, of which $3 million were TDR commercial loans not secured by real estate, said Leggett.
The net charge-off rate was 2.78% as of June 2018.
Provisions for loan and lease losses increased at the credit union by $2.4 million to $8.7 million.
“But the increase in provisions for loan and lease losses was outpaced by net charge-offs, this caused the allowance for loan and lease losses to decline by almost 2% to $32.9 million. The coverage ratio for the credit union rose to 79.63% in June 2018 from 78.44% in March 2018,” Leggett said.