Tuesday, May 3, 2016

Delinquencies Up Sharply at Taxi Medallion Lender LOMTO FCU

Taxi medallion lender LOMTO Federal Credit Union (Woodside, NY) saw a further weakening in its financial performance during the first quarter of 2016.

The credit union reported that delinquencies rose during the first quarter from $6.4 million to $22.4 million. As of March 2016, 9.59 percent of its loans were 60 days or more past due -- this is up from 2.65 percent at the end of 2015.

In addition, the pipeline of early delinquencies jumped during the quarter. As of December 2015, loans 30 to 59 days delinquent were $9.5 million. At the end of the first quarter of 2016, $15.3 million in loans were 30 to 59 days past due.

While delinquencies are elevated, charge offs remain rare. LOMTO reported net charge offs of almost $1 million for the first quarter.

LOMTO stated that at the end of the first quarter $35.8 million in loans were classified as trouble debt restructured (TDR) -- of which $19 million were in accrual status . This is down from $37.9 million at the end of 2015. As of March 2016, TDR loans were 15.35 percent of loans and 90.89 percent of net worth respectively.

As the credit union expects additional losses from taxi medallion loans, it increased its provisions for loan and lease losses.

At the end of the first quarter of 2016, LOMTO recorded $3 million in provisions for loan and lease losses. In comparison, a year earlier the credit union reported only $300,000 in provisions for loan and lease losses.

Due the increase in provisions for loan and lease losses, LOMTO recorded a loss of $3.1 million for the first 3 months of 2016.

The loss caused the credit union's net worth to fall. As of March 2016, the credit union's net worth was $39.4 million. At the end of the previous quarter, the credit union had slightly less than $42.6 million in net worth.

The credit union's net worth ratio fell by 80 basis points during the quarter to 14.76 percent.

The increase in provisions caused LOMTO's allowance for loan and lease losses to rise from $10.2 million as of December 2015 to $12.2 million as of March 2016.

The jump in delinquencies caused the credit union's coverage ratio (Allowance for loan and lease losses divided by delinquent loans) to fall to 54.40 percent as of March 2016 -- down from 158.36 percent from the previous quarter.

However, the credit union's coverage ratio was overstated as $7.55 million in allowances for loan and lease losses were for TDR loans.

Avadian CU Completes Acquisition of Bank

Avadian Credit Union (Birmingham, AL) completed its acquisition of American Bank of Huntsville, Alabama.

The purchase of American Bank brings Avadian's total assets to $747 million and membership to more than 73,000.

The purchase price of the deal was not disclosed.

Read the news story.

Monday, May 2, 2016

Taxi Medallion Loan Delinquencies and TDRs Jump at Progressive

Progressive Credit Union (New York, NY) reported more problems associated with its taxi medallion loan portfolio.

After reporting a loss of $19.5 million loss for all of 2015, Progressive Credit Union posted a loss of $15.8 million for the first quarter of 2016.

Driving the loss was an increase in provisions for loan and lease losses. Progressive reported provisions for loan and lease losses of $19.1 million for the first quarter of 2016. A year earlier, the credit union had provisions for loan and lease losses of almost $1.7 million.

As of March 31, 2016, loans 60 days or more past due were slightly less than $24.6 million. This was up from $20.8 million at the end of 2015 and $3.75 million as of March 2015. At the end of the first quarter of 2016, 4.07 percent of the credit union's loans were delinquent.

In addition, early delinquencies (30 to 59 days past due) jumped from $9.9 million at the end of 2015 to $32.3 million as of March 2016.

The credit union reported a significant increase in trouble debt restructured loans (TDRs), which rose from $33.5 million at the end of 2015 to almost $89 million as of March 31, 2016. All TDRs were in nonaccrual status. TDRs represented 14.76 percent of all loans and 37.62 percent of its net worth at the end of the first quarter.


Progressive had net charge offs of almost $5 million at the end of the first quarter of 2016 compared to $1.3 million one year earlier.

Progressive Credit Union currently has a large cushion to absorb expected and unexpected losses from its taxi medallion loan portfolio.

At the end of the most recent quarter, Progressive had $55.7 million in allowances for loan and lease losses -- an increase of slightly more than $14.1 million from the end of 2015. Approximately $11.6 million in allowances for loan and lease losses was attributed to troubled debt restructured loans.

As of March 2016, the credit union had a coverage ratio (allowances for loan and lease losses to delinquent loans) of almost 227 percent.

Furthermore, Progressive is holding $232.9 million in equity at the end of the first quarter of 2016. The credit union has a net worth ratio of 37.22 percent, which fell by 186 basis points from the end of the previous quarter.

Sunday, May 1, 2016

Melrose Credit Union: May Day! May Day!

First quarter 2016 data show a sharp deterioration in the financial performance of taxi medallion lender Melrose Credit Union (Briarwood, NY), as the taxi industry is disrupted by ridesharing companies.

The $1.9 billion credit union reported that delinquent loans more than doubled between December 2015 and March 2016. As of March 2016, Melrose had almost $371 million in loans 60 days or more past due. This is up from $155 million at the end of 2015.

As of March 2016, 18.62 percent of Melrose's loans were delinquent compared to 7.80 percent of loans at the end of 2015 (click on image to enlarge).


Delinquent loans at the end of the first quarter equaled 185.71 percent of the credit union's net worth.

In addition, there were more problems in the pipeline. The credit union is reporting that $72.85 million in loans were 30 to 59 days past due as of March 31, 2016.

The credit union also reported almost $376.7 million in trouble debt restructured (TDR) loans as of March 2016. All TDR loans are in nonaccrual status. TDR loans represent 18.91 percent of all loans and 188.67 percent of net worth.

Melrose reported a loss of almost $5.6 million, as it recorded provisions for loan and lease losses of $11.3 million during the first quarter of 2016.

Melrose reported that its allowance for loan and lease losses was $241.7 million as of March 31, 2016, of which $145.4 million was allocated to TDR loans. Its March 2016 coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 65.18 percent -- down from 148.25 percent at the end of the prior quarter.

The credit union as of March 2016 held $199.6 million in net worth. Its net worth ratio was 10.37 percent -- down 32 basis points from the previous quarter.

This means that the credit union has a buffer of slightly more than $441 million to absorb expected and unexpected losses.

Friday, April 29, 2016

Success: U.S. Eagle Removes Impermissible Common Bond from Online Application

Earlier this week, I wrote that U.S. Eagle Federal Credit Union (Albuquerque, NM) was still listing an impermissible common bond of "50 years of age or better and a resident of New Mexico" on its online membership application.

I can report that as of this morning the credit union has removed this impermissible common bond.

Below is a screen shot of this page.

Thursday, April 28, 2016

Coastal CU Secures Naming Rights to Amphitheatre (Updated)

Raleigh-based Coastal Federal Credit Union has secured the naming rights to Walnut Creek Amphitheatre in Raleigh.

The Triangle’s largest outdoor amphitheater will now be called Coastal Credit Union Music Park at Walnut Creek.

While specific deal terms were not disclosed, a news report indicated that it is a multi-year deal with options to extend it longer.

Coastal FCU has about $2.6 billion in assets.

Update:

The News & Observer is reporting that "[a]ccording to the city, Coastal will pay a total of $1.8 million over five years – $200,000 in 2016 and $400,000 each of the next four years. Raleigh and Live Nation will split the deal’s net proceeds evenly, less costs such as new signs for the venue."

Read the story.

Royal Credit Union to Acquire Saint Paul-based Capital Bank

Royal Credit Union (Eau Claire, WI) has entered into an agreement to acquire Capital Bank (Saint Paul, MN).

Under the terms of the agreement, Royal will assume approximately $35 million in total assets in the transaction. The deal is expected to be completed in the second half of 2016. The acquisition is still awaiting approval of state regulators, the FDIC, and NCUA.

Royal Credit Union has almost $1.8 billion in assets.

In 2010, Royal Credit Union (WI) acquired the 11 branches and $177 million in deposits from Anchor Bank (WI).

Read the press release.
 

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