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.
Really glad you're staying with this. The changing world has changed taxi medallion loans from a relatively safe bet to a huge concentration risk that poses a serious threat to the NCUSIF, and no one else is even talking about it.
ReplyDeleteNo one is talking about it and why is that??
ReplyDeleteDidn't we just go thru this w CCUs?
Where are the trades and NCUA on this?
Covering up like w CCUs?
Joke.
What is the total potential damage?
Is mr Umholtz correct?