Melrose Credit Union Insolvent

Massive losses from bad taxi medallion loans have wiped out the net worth of Melrose Credit Union (Briarwood, NY).

Melrose Credit Union was placed into conservatorship on February 10, 2017.

The $1.49 billion credit union reported a year-to-date loss of almost $178.4 million as of September 2017. The loss arose from an increase in provision for loan and lease losses. Year-to-date provision for loan and lease losses was $178.2 million with $116.3 million increase during the third quarter.

As a result of the massive loss, the credit union's net worth went from $102.2 million at the end of 2016 to minus $76.1 million as of third quarter of 2017. The credit union's net worth ratio was negative 5.10 percent -- meaning it was critically undercapitalized as of the most recent call report.

Loans 60 days or more past due were $668.5 million as of September 2017. Loans 360 days or more past due were approximately $424.7 million -- up from $111.9 million from the previous quarter and $366.9 million from a year ago.

The credit union was also reporting that $37.8 million loans were in the early stage of delinquencies (30 to 59 days past due).

The delinquency rate on loans was 40.01 percent. This was up from 37.85 percent as of June 2017 and 24.12 percent as of September 2016.

Due to the increase in provision for loan and lease losses, the allowance for loan and lease losses rose from $210.3 million as of June 2017 to $326.5 million.

However despite this increase, the credit union's loan loss reserves are underfunded with a coverage ratio of 48.83 percent as of September 2017.