PURCHASE, N.Y.—While all New York City credit union taxi medallion lenders have either been conserved or merged out, the impact of ride-sharing services on CU loan portfolios continues in this state.
Troubled taxi medallion participation loans contributed to a large 2018 loss at Quorum Federal Credit Union here, reports Keith Leggett, the former senior vice president and senior economist at the ABA.
The credit union contracted by almost 5% during 2018 to $817.5 million at the end of 2018, Leggett said.
“Its portfolio of commercial loans not secured by real estate fell by $14.5 million during 2018 to $49.9 million. Presumably all or most of these loans were taxi medallion participation loans. Quorum FCU ended its taxi medallion participation loan program in 2013,” Leggett said.
After recording a profit of $1.8 million for 2017, Quorum FCU reported a full year loss just shy of $8.3 million. During the fourth quarter, the credit union saw a loss of $4.16 million. The loss was driven by a $5.8 million increase in provision for loan and lease losses during the fourth quarter of 2018 to $21.1 million, Leggett noted.
Decline in Net Worth
“Due to the loss, the credit union's net worth fell from $67.3 million at the end of 2017 to $59 million at the end of 2018. The credit union's net worth ratio dropped by 60 basis points over the same time period to 7.22%,” Leggett said.
As of December 2018, the credit union reported almost $38.7 million in delinquent loans – down 11.9% from the prior quarter.
“This translates to 5.50% of its loan portfolio being 60 days or more past due,” Leggett said. “Almost 71% of the delinquent loans were nonmember commercial loans not secured by real estate.”
In addition, 58.28% of nonmember commercial loans not secured by real estate were 180 days or more delinquent with the vast majority of these loans being at least 360 days past due.
Increase in Charge-Offs
Net charge-offs at Quorum were almost $18.4 million for 2018. This was up from $8.1 million for 2017. At the end of 2018, the net charge off rate was 2.55 percent, Leggett noted, adding taxi medallion participation loans accounted for almost $11.17 million of the net charge-offs for 2018.
As CUToday.info reported, the $385-million Progressive CU merged into PenFed Jan. 1. Progressive was the last taxi-medallion credit union left standing—after Montauk CU, Melrose CU and LOMTO FCU all failed due to the impact on their portfolios from Uber and Lyft.