Taxi Medallion Loans Stress Two New Jersey Credit Unions

Taxi medallion loans continue to stress the performance of two New Jersey credit unions in the first quarter of 2017. Both credit unions owned credit union service organizations that financed taxi medallions.

First Jersey Credit Union

The increase in provisions for loan and lease losses caused First Jersey Credit Union (Wayne, NJ) to go from a profit of 82,404 in the first quarter of 2016 to a loss of $847, 040 at the end of the first quarter of 2017.

The credit union reported approximately $862 thousand in provisions for loan and lease losses as of March 31, 2017. A year earlier, the credit union did not report any provisions for loan and lease losses.

First Jersey Credit Union reported a year-over-year reduction in its net worth due to large losses. The credit union's net worth fell from almost $12.4 million to slightly less than $7.2 million. As a result, the credit union's net worth ratio declined by 263 basis points over the last year to 6.44 percent as of March 31, 2017. The credit union currently meets the requirement of being adequately capitalized.

At the end of March 31, 2017, almost $4.1 million in delinquent loans, of which $1.9 million were member business loans (MBL). Early delinquencies (30 to 59 days past due) were $4.6 million, of which $3.1 million are MBLs.

However, the delinquency rate fell from last quarter and from one year ago. At the end of March 31, 2017, the delinquency rate was 5.80 percent compared to 7.82 percent at the end of 2016 and 8.71 percent from a year ago.

Member business loans 60 days or more delinquent was 14.43 percent -- down from 28.57 percent a year earlier. However, there was little change in the 30 day plus delinquency rate for business loans over the last year. Almost one-third of all business loans are 30 days or past due.

Troubled debt restructured business loans increased by 86 percent over the last year to almost $2.9 million.

First Jersey had $2 million in foreclosed and repossessed other assets as of March 31, 217 -- up from zero a year ago.

The credit union has a total buffer of net worth and allowances for loan and lease losses of $11.7 million to absorb expected and unexpected losses at the end of March 2017.

Aspire Federal Credit Union

Aspire Federal Credit Union (Wayne, NJ) reported a loss of $519,386 during the first quarter of 2017. In comparison, the credit union recorded a quarterly loss of $93,723 one year earlier.

The first quarter 2017 loss was partly due to the credit union setting aside $884,357 in provisions for loan and lease losses.

As a result of a 2016 loss of $1.6 million and a first quarter loss of $519 thousand, the credit union's net worth fell from slightly more than $19 million to $17 million. The credit union's net worth ratio fell by 34 basis points over the prior year to 9.81 percent as of March 2017.

Year-over-year loans 60 days or more past due were up by almost $1 million to just below $5.7 million. Early delinquencies were up about $327 thousand to $5.85 million.

The percentage of loans 60 days or more past due were up from last year; but down from the previous quarter. The delinquency rate as of March 2017 was 4.16 percent, down from 5.18 percent as of the end of 2016 and up from 3.09 percent from a year ago.

The credit union reported that $2.6 million in business loans were 60 days or more past due. Early delinquencies for business loans were $3.15 million. Almost one-third of Aspire's business loans were 30 days or more delinquent and 14.96 percent of business loans were 60 days or more past due.

Outstanding troubled debt restructured business loans were $4.3 million as of March 31, 2017.

The credit union reported as of March 31, 2017 foreclosed and repossessed other assets, presumably taxi medallion loans, were almost $1.9 million -- up over 900 percent from a year ago.

The credit union has a combined net worth and loan loss reserve buffer of $21.7 million to absorb expected and unexpected losses.