Tuesday, May 9, 2017

Melrose CU Is Significantly Undercapitalized

Melrose Credit Union (Briarwood, NY) was significantly undercapitalized at the end of the first quarter 2017.

Due to losses of $38.2 million in the first quarter, the credit union's net worth fell from $102.2 million at the end of 2016 to $64 million at the end of the first quarter of 2017. As a result, the credit union's net worth ratio fell 198 basis points during the quarter to 3.75 percent at the end of the first quarter of 2017.

The $38.2 million loss for the first quarter was due to the credit union increasing provisions for loan and lease losses by almost $40.8 million during the first quarter.

Loans 60 days or more delinquent rose by over $76 million during the first quarter to $577.8 million. As a result, delinquency rate was 33.71 percent a the end of the first quarter.

In addition, $60.4 million in loans were 30 days to 59 days more past due.

After charging off almost $194 million in loans in 2016, the credit union recorded only $1.8 million in net charge-offs during the first quarter of 2017.

The increase in loan loss provisions during the first quarter caused the allowances for loan and lease losses account to increase from $149.2 million at the end of 2016 to almost $188.2 million at the end of the first quarter of 2017.

The coverage ratio edged higher from 29.76 percent at the end of 2016 to 32.57 percent at the end of the first quarter of 2017.

The following table looks at key performance metrics for Melrose Credit Union.




5 comments:

  1. "By no means is that the only thing (taxi loans) we do. Besides, we have one of the highest equities (sic) in the entire credit union industry".
    Alan Kaufman, former CEO of Melrose in CU Times September 8, 2015.
    The Prince that inherited his grandfathers business and did nothing but ride medallion loans. It was by all means the only thing they did, 75% of assets.
    Nice diversity.
    Nicer board supervision.
    Even better regulatory supervision allowing such concentration.

    ReplyDelete
  2. Actually they did diversify more than some of the other taxi credit unions and I don't see how specializing in certain members was a bad thing. I love how all the Monday morning quarterbackers come out and act like they know better. Much like the housing bubble...no one could have predicted what is happening in the taxi industry. How NYC is allowing UBER and other services like that to operate under different rules than taxis is beyond me. Level the playing field and then see how things work out. If you don't have first-hand knowledge about the CU then you should write articles like this. It is so misleading..your banker side is showing.

    ReplyDelete
  3. Credit aunions are appalled by this, forget your ridiculous banker comment.
    You call diversity as 25% of assets NOT in medallion loans?
    You're not only wrong headed, you're not experienced enough to recognize what constitutes as OVER CONCENTRATED?
    If melrose was a bank. They would have been stopped at 35-40% of assets.
    Wake up.

    ReplyDelete
  4. Melrose has 75% of assets in one loan type?
    Insane.

    ReplyDelete
  5. "How NYC is allowing UBER and other services like that to operate under different rules....."

    Very similar to the way Banks and Credit Unions play by different rules, eh?? If we are leveling playing fields lets level this one also....same taxation, same supervision

    ReplyDelete

 

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