Monday, February 8, 2016

Q4 Update on Taxi Medallion Lender Progressive CU

Despite the growth of bad taxi medallion loans, Progressive Credit Union (New York, NY) built loan loss reserves and maintained its large capital cushion. This gives the credit union the strength to ride out the disruptions impacting the taxi industry.

In the last quarter of 2015, Progressive CU increased its provisions for loan losses by $9 million to almost $16.3 million. This increase in provisions caused the credit union's allowance for loan and lease losses to grow from $12.86 million as of September 2015 to $21.8 million at the end of 2015.

Progressive CU reported a strong capital position of $268.5 million at the end of 2015. As a result, its net worth ratio at the end of 2015 was 40.91 percent -- up from 38.83 percent a year earlier. This lack of leverage at Progressive CU means it currently has the capacity to manage defaulting taxi medallion loans.

Asset quality at the $665 million credit union deteriorated during the fourth quarter. Delinquent loans at Progressive Credit Union grew by $14.3 million during the quarter to $20.8 million at the end of 2015. This more than tripling of delinquent loans caused the delinquency ratio to jump from 1.05 percent as of September 30, 2015 to 3.45 percent at the end of 2015.

The credit union also reported almost doubling of troubled debt restructured (TDR) loans during the fourth quarter to $47.9 million as of December 2015. TDR loans represented 17.58 percent of the credit union's net worth.

The good news for Progressive is that the pipeline of early delinquencies fell during the fourth quarter from almost $13.5 million at the end of the third quarter to approximately $9.9 million as of December 2015.

Progressive's coverage ratio (allowance for loan and lease losses to delinquent loans) was 104.89 percent at the end of 2015. This means that all loans 60 days delinquent or more could be completely written off and Progressive would still have some leftover loan loss reserves.

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