Bad Taxi Medallion Loans Negatively Affect These NY Credit Unions

Carnage in the taxi industry from ride sharing apps continues to negatively impact several New York credit unions.

Van Cortlandt Cooperative FCU (Bronx, NY)

Over 25 percent of loans at Van Cortlandt Cooperative FCU were delinquent at the end of the third quarter of 2017.

The $72 million credit union reported that $8 million in loans were 60 days or more past due as of September 2017. More than half (57 percent) of the delinquent loans were past due for 360 days or more.

Almost all of the delinquent loans (slightly less than $8 million) were nonmember commercial loans, which presumably were taxi medallion participation loans.

As of September 2017, the credit union reported $10.6 million in purchased commercial loans or participations to nonmembers. Over three-quarters of these loans (75.42 percent) were 60 days or more past due.

The credit union further reported almost $6.7 million of troubled debt restructured commercial loans.

One factor mitigating the dire delinquency ratio is that the credit union has a loan to asset ratio of 38.65 percent.

In addition, the credit union had a year-to-date loss of $409 thousand, after posting a loss for 2016 of $3.2 million.

Over the last year, the credit union's net worth ratio has fallen from almost $11 million to approximately $6.5 million. The credit union's net worth ratio has tumbled from 13.99 percent to 8.97 percent.

The credit union is reporting that it has allowances for loan and lease losses of $4 million. This gives the credit union a coverage ratio of 49.98 percent.

Bay Ridge FCU (Brooklyn, NY)

Bay Ridge FCU reported a loss for the first nine months of 2017 of almost $2.6 million. In comparison, the credit union reported a profit of almost $250 thousand for the same time period in 2016.

The loss was due to provisions for loan and lease losses of $4.3 million as of September 2017.

Due to its loss, the credit union's net worth dropped from $19 million at the end of 2016 to $16.3 million as of September 2017. Over the comparable time period, its net worth ratio fell by 110 basis points to 8.37 percent.

The credit union reported almost $8.3 million in delinquent loans at the end of the third quarter of 2017 -- this was up from $3.8 million from a year ago. The percent age of delinquent loans rose from 2.20 percent to 4.83 percent.

Almost $5.9 million of the delinquent loans were commercial loans not secured by real estate.

In addition, the credit union is reporting almost $21.6 million in troubled debt restructured commercial loans. Troubled debt restructured commercial loans were almost 130 percent of the credit union's net worth.

Due to the increase in provisions for loan and lease losses, the credit union increased its allowance for loan and lease losses to $5.9 million. The portion of allowance for loan and lease losses that were troubled debt restructured loans was $4.3 million.

The credit union's coverage ratio was 71.58 percent as of the end of the third quarter of 2017.

G.P.O. FCU (New Hartford, NY)

Participation loans, presumable taxi medallion participation loans, accounted for most of G.P.O. FCU's non-performing loans.

The credit union reported holding $13.7 million in participation commercial loans, as of September 2017. Participation loans represented 8.10 percent of the credit union's total loans.

Of its $7 million in delinquent loans, almost $5.8 million were delinquent participation loans. The credit union reported 42.11 percent of its participation loans were 60 days or more past due.

Of the $5.7 million delinquent participation loans, approximately $3.7 million were 360 days or more delinquent.

In addition, $1.9 million in participation loans were charged off minus recoveries. The net charge-off rate on participation loans was 16.85 percent.

Despite the non-performance of these participation loans, the credit union was profitable and continued to build its net worth during the third quarter.