Wednesday, April 27, 2016

Taxi Medallion Participation Loans Adversely Impact Quorum FCU

In its 2015 Annual Report, Quorum Federal Credit Union provides additional details on the performance of its $76.3 million portfolio of taxi medallion participation loans.

Taxi participation loans are collateralized by taxi medallions, primarily in the cities of Philadelphia, New York, Boston, and Chicago. Quorum owns a percentage of each loan, primarily between 80 percent and 90 percent.

Quorum reported that at the end of 2015 almost $6.1 million in taxi medallion participation loans were past due 90 days or more and were in non-accrual status. In addition, $4.35 million in taxi participation loans were 60 to 89 days past due and $2 million in taxi medallion participation loans were 30 to 59 past due.

This means 16.3 percent of all taxi medallion loans were in some stage of delinquency.

Quorum also reported 5 modified taxi medallion participation loans worth almost $6.6 million at the end of 2015.

Quorum further stated in its Annual Report:
Recently, market disruption has occurred in the taxi industry due to new competition. This competition has negatively impacted the taxi industry, its revenues and has caused the value of taxi medallions to depreciate over the past year. Further or prolonged market disruption in the taxi industry may increase our delinquencies and non-accrual loans collateralized by taxi medallions. It is at least reasonably possible that our losses on these loans could increase in the near term due to further or prolonged market disruption impacting the value of taxi medallions.

In fact, Quorum's first quarter Call Report shows a further erosion in its performance, as more participation loans became delinquent. The credit union posted a loss of almost $3 million for the first quarter after recording a profit of $3.4 million for all of 2015. Quorum reported an increase in provisions for loan and lease losses during the first quarter of 2016 compared to a year ago -- $6.8 million versus almost $2.2 million, respectively.

This explains why Quorum is advertising to hire a commercial workout specialist.

Read the 2015 Annual Report.

1 comment:

  1. Let's hope the cu doesn't have any other loan problems because the medallions are a huge percent of their capital!



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