Monday, October 26, 2015

Taxi Medallion Lender Montauk Sees Sharp Rise in Delinquent Loans

Montauk Credit Union's financial performance deteriorated during the third quarter of 2015.

Montauk Credit Union (New York, NY) was placed into conservatorship on September 18, 2015.

According to its financial performance report, loans 60 days or more delinquent increased from $4.95 million on June 30 to $16.28 million as of September 30. In other words, the percent of loans 60 days or more past due went from 2.96 percent to 9.79 percent.

In addition, the pipeline of new delinquencies (30 to 59 days delinquent) rose from $14.3 million to slightly more than $19 million over the same time period.

Furthermore, troubled debt restructurings (TDRs) rose from $28.5 million to $30.4 million during the quarter. TDRs on September 30 as a percent of total loans and net worth were 18.28 percent and 160.6 percent, respectively.

Participation loan delinquency rates rose from 1.02 percent to 6.84 percent. This would indicate the pain from participations is spreading to other credit unions that bough participations from Montauk.

Despite rising delinquencies, provisioning for loan losses was unchanged during the quarter. As a result, allowances for loan and lease losses was unchanged at $5.58 million. This means Montauk's coverage ratio (allowances for loan and lease losses to delinquent loans) fell from 112.71 percent on June 30 to 34.29 percent on September 30.

As of September 30, Montauk reported net worth of $18.9 million. The credit union did report a 20 basis point improvement in its net worth ratio to 10.54 percent as the credit union posted a profit of $454 thousand during the third quarter.

Therefore, the credit union has a total cushion (net worth and allowance for loan and lease losses) to absorb expected and unexpected losses of $24.5 million.


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