Tuesday, May 10, 2016

More on Taxi Medallion Lending CUs and Taxi Medallion Prices

Two credit unions that have exposure to taxi medallion loans did not set aside any provisions for loan and lease losses during the first quarter of 2016.

According to the Financial Performance Report of Bay Ridge Federal Credit Union (Brooklyn, NY), the credit union recorded zero provisions for loan and lease losses. While delinquent loans fell during the first quarter, there was a near tripling of troubled debt restructured (TDR) loans. TDR loans went from almost $5.7 million at the end of 2015 to approximately $16.9 million as of March 2016. TDR loans were 9.88 percent of all loans and 87.41 percent of net worth. Also, the $202 million credit union has almost $8.6 million in loans that were 30 days to 59 days past due.

The other credit union is First Jersey Credit Union of Wayne, NJ. The $136 million credit union recorded zero provisions for loan and lease losses during the first quarter of 2016. However, the credit union reported an increase in delinquent loans. Delinquent loans went from almost $3.9 million at the end of 2015 to slightly more than $7.1 million in delinquent loans as of March 2016. The delinquency ratio over the same time period went from 4.5 percent to 8.71 percent. the coverage ratio (allowances for loan and lease losses to delinquent loans) of the credit union was 39.32 percent, which suggests that the credit union is under-reserved.

Chicago Medallion Prices Plummet

According to Seeking Alpha, "Chicago had one of the most active months for medallion transfers with 12 deals in April. Clearing prices ranged from $55,00 to $60,000." In comparison, there were 13 deals in April 2014 with Chicago taxi medallion prices ranging between $290,000 to $375,000. This indicates that medallion values have fallen between 79 percent and 87 percent in the last two years.

Chicago taxi medallion prices are in the process of establishing a floor at a new substantially lower equilibrium price.

This indicates more pain is to come to credit unions that are holding Chicago taxi medallion loans.

Click here for 2016 taxi medallion transfer prices.

Click here for 2014 taxi medallion transfer prices.

1 comment:

  1. How is the credit union medallion story NOT front page news in MSM or CU papers?
    The delinq and TDR indicate a blood bath and with collateral down 75% from where many loans were written.
    Are we facing assessments and another stabilization fund?
    Can you provide insight on the liquidity of these credit unions?



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