Tuesday, August 8, 2017

Taxi Medallion Lender LOMTO FCU is Critically Undercapitalized as of Q2 2017

LOMTO Federal Credit Union (Woodside, NY) is critically undercapitalized as the credit union was battered by nonperforming taxi medallion loans.

The 219 million credit union reported a loss of $10.8 million through the first six months of 2017.

The loss was driven by an increase in provisions for loan and lease losses in the second quarter, after the credit union had recaptures some loan loss reserves in the first quarter. Year-to-date provisions for loan and lease losses were almost $10.5 million.

As a result of the loss, the credit union's net worth fell from $14.1 million as of March 2017 to $2.9 million as of June 2017. As a result, its net worth ratio fell from 5.97 percent to 1.31 percent.

Delinquent loans were $38.4 million as of June 2017, down from $42.8 million the previous quarter.

The delinquency rate edged lower from 20.55 percent at the end of the first quarter to 20.50 percent as of June 2017. However, delinquent loans as a percent of net worth was 1,337.80 percent as of June 2017

Early delinquencies fell during the quarter by 28.5 percent to almost $9.1 million.

Net charge-offs soared during the second quarter from $2.9 million to $13.8 million. At the end of June 2017, the net charge-off rate was 13.70 percent.

At the end of the second quarter, troubled debt restructured (TDR) business loans were $22.6 million. The percent age of TDR loans that were 6o days or more past due was 59.88 percent at the end of the most current quarter.

TDR business loans were 12.08 percent of all loans and 788.34 percent of net worth.

Foreclosed and repossessed other assets (taxi medallions) increased by 71.2 percent during the second quarter to $23.5 million.

Allowances for loan and lease losses (ALLL) increased by approximately $2 million during the quarter to $23.9 million. As a result, the coverage ratio increased from 51.21 percent as of March to 62.39 percent as of June. However, the portion of the ALLL allocated to TDR loans was $10.4 million.

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