PURCHASE, N.Y.—Quorum FCU, a taxi medallion lender, reported an increase in delinquencies during the third quarter due to troubled participation loans.
During the third quarter, delinquent loans increased by $4.1 or 8.2% to $53.7 million, reported Keith Leggett, the former senior vice president and senior economist at the ABA, on his Credit Union Watch blog.
As of September, Quorum FCU reported that 7.22% of its loans were 60 days or more past due. That was up from 6.74% as of June 2017 and 4.20% from a year ago.
“Almost 80% of the credit union's delinquencies were participation loans, presumably taxi medallion participation loans,” said Leggett. “As of Sept. 30, 2017, delinquent participation loans were almost $42.7 million – up $3.2 million from the previous quarter and $22.6 million from a year ago, respectively.”
The credit union reported $113 million in participation loans, of which $79.7 million were commercial loans.
“It appears that $70.6 million of the commercial loans were taxi medallion participation loans,” said Leggett.
As CUToday.info has extensively reported, the value of taxi medallions in New York City have fallen dramatically due to the impact of ride sharing services such as Uber.
As of Sept. 30, the delinquency rate on participation loans was 37.57%. This was up from 16.35% from a year ago. Troubled debt restructured commercial loans not secured by real estate were $24.4 million, Leggett stated.
The credit union reported a year-to-date profit of $427,000, but a third quarter loss of $2.3 million. The loss was driven by a $6.7 million increase in provision for loan and lease losses during the quarter, noted Leggett.
The quarterly loss caused the credit union's net worth to fall from $68.2 million as of June 2017 to $65.9 million as of September 2017. As a result, the net worth ratio fell 15 basis points during the quarter to 7.65% on September 30, 2017, observed Leggett.
The increase in provisions for loan and lease losses caused ALL losses to increase to $34.2 million at the end of the third quarter from $28.9 million a quarter earlier. Quorum's coverage ratio (allowances for loan and lease losses to delinquent loans) was 63.65% as of September 2017 – up from 58.22% as of June 2017, but down from 82.57% from a year ago, said Leggett, who noted that Quorum ended its taxi medallion participation loan program in 2013.
Falling medallion prices have impacted several Big Apple CUs. NCUA in June placed medallion lender LOMTO FCU, Woodside, N.Y., into conservatorship.
LOMTO is the third taxi-medallion CU the agency has taken action against as the value of medallions in New York City, which are required in order to legally drive a cab, have plummeted. That has led many members to default on their medallion loans.
Such defaults led to the conservatorship of the $1.8-billion Melrose Credit Union earlier this year and, prior to that in September of 2015, the conservatorship of another taxi medallion lender, Montauk CU. It was later merged into Bethpage FCU.