NEW YORK—Progressive CU, the strongest of the taxi medallion credit unions in the Big Apple, reported a loss of $45 million through the first six months of 2017.
The impact of ride-sharing services on the taxi industry have sent medallion values plummeting in New York City and elsewhere. Medallions are required in order to legally drive a cab. Medallion values are reported to be at approximately half of their peak values, and that has led many members to default on their medallion loans.
Progressive’s recent loss are the result of an increase in its provisions for loan and lease losses to build its reserves to cover problem taxi medallion loans. The credit union increased provisions for loan losses in the second quarter of 2017 by almost $14 million to $40.4 million, 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 loss, the credit union's net worth fell from $169.4 million as of March 31, 2017 to slightly less than $150 million at the end of the second quarter. Its net worth ratio over the same period dropped from 31.10% to 29.31%.
Delinquent loans rose during the quarter by $13.3 million to almost $59.5 million. The delinquency rate went from 9.16% to 12.24%. Early delinquencies (loans 30 days to 59 days past due) were $16 million as of June 30, down from prior quarter's $21.1 million, reported Leggett.
Net charge-offs jumped during the second quarter to $42.8 million from $34.8 million. One year earlier, net charge-offs were $4.3 million. As of June 30, 2017, the net charge-off rate was 16.05%, noted Leggett.
“Over the last year, foreclosed and repossessed other assets (taxi medallions) rose from less than $1 million to $24.8 million, although it fell from its March 2017 level of $29.9 million,” stated Leggett. “Troubled debt restructured (TDR) business loans were $120.4 million at the end of the second quarter of 2017. TDR loans were 24.79% of its total loans. Thirteen percent of TDR loans were 60 days or more past due as of June 30, up from 5.44% the prior quarter.”
The credit union's allowance for loan and lease losses (ALLL) rose by $6 million during the quarter to almost $68.7 million. The credit union's coverage ratio was 115.54%.
“However, the coverage ratio is overstated, as $26.4 million was dedicated to TDR loans,” stated Leggett. “As of June 30, 2017, Progressive Credit Union has a buffer of net worth and ALLL of almost $218.7 million to cover both expected and unexpected losses.”
CUToday.info has reported on the troubles facing medallion lenders in this city. NCUA in June placed medallion lender LOMTO FCU, Woodside, N.Y., into conservatorship, making it the third taxi-medallion CU the agency has taken action against.
Earlier this year the $1.8-billion Melrose Credit Union was conserved. Prior to that, in September of 2015, taxi medallion lender Montauk CU was conserved. It was later merged into Bethpage FCU.