Below is information on the performance of several New York credit unions in 2017 that have some exposure to taxi medallion loans. This information should help inform credit union members about the relative performance of their institutions.
G.P.O. Federal Credit Union (New Hartford, NY)
G.P.O. FCU charged off over half of its commercial loan participations in 2017, as the credit union took steps to clean up its non-performing taxi medallion portfolio.
At the end of the third quarter, the credit union reported holding $13.7 million in commercial loan participations, presumably taxi medallion loans. At the end of 2017, the credit union reported holding $7.8 million in participation loans.
at the end of the third quarter of 2017, the credit union reported almost $5.77 million in delinquent commercial participation loans or 42.11 percent of its participation portfolio. At the end of the fourth quarter of 2017, the credit union reported zero delinquent participation loans.
In addition, troubled debt restructured commercial participation loans fell by almost 51 percent during the fourth quarter of 2017 to $1.24 million.
The credit union reported $4.8 million in net charge-offs of commercial participation loans during the fourth quarter of 2017. Total 2017 net charge-offs of commercial participation loans was $6.7 million. Commercial loan participations accounted for most of the credit union's $7.6 million in net charge-offs.
Goning forward, the credit union appears to be in good shape to address any additional problems associated with its commercial loan participations. The credit union has $23.5 million in net worth. its net worth ratio was 9.19 percent at the end of 2017. Also, the credit union has $3.4 million in allowance for loan and lease losses, as a result the credit union has a coverage ratio of 382 percent.
Ocean Financial Federal Credit Union (Oceanside, NY)
Ocean Financial Federal Credit Union went from posting a profit in 2016 to a loss in 2017 to address problem loans.
The credit union at the end of 2017 had $6.2 million in commercial loan participations, presumably taxi medallion loans.
The credit union reported a profit of $954,476 for 2016. However, the credit union recorded a loss of $3.4 million for 2017, as the credit union significantly increased its provision for loan and lease losses.
Ocean Financial FCU had $658 thousand in provision for loan and lease losses for 2016. in 2017, provision for loan and lease losses increased by 558 percent to $4.33 million with most of the increase coming in the fourth quarter.
The increase in provision for loan and lease losses is due to an uptick in delinquencies. The credit union reported a 19.9 percent increase in delinquencies during the fourth quarter to $6.8 million. At the end of 2017, 3.57 percent of all loans were past due.
In addition, more than half of the delinquent loans ($3.6 million were nonmember commercial loans not secured by real estate. In other words, 57.77 percent of thee loans were at least 60 days or more past due.
Ocean Financial further reported that troubled debt restructured commercial loans were $6.2 million at the end of 2017. This corresponds to the amount of commercial loan participations.
The loss caused the credit union's net worth to drop by 12.2 percent between the end of 2016 and the end of 2017 to $24.5 million. Its net worth ratio over the same time period declined by 102 basis points to 7.83 percent.
Due to the increase in provision for loan and lease losses in the 4th quarter, the credit union saw 131.5 percent increase in its allowance for loan and lease losses to $5.2 million. As a result, the credit union's coverage ratio went from 39.9 percent to 77.06 percent.
Going forward, it appears that the the credit union will be able to handle losses from its taxi medallion portfolio.
N Y Team Federal Credit Union (Hicksville, NY)
Delinquent loans, presumably taxi medallion participation loans, appear to have adversely impacted the performance of N Y Team FCU in 2017.
It appears that the credit union had $2.6 million in commercial loan participations, which are most likely taxi medallion loans.
The $36 million credit union reported a 2017 loss of $334,702, after posting a loss of $688,060 in 2016. The 2017 loss can be attributed to $824,570 provision for loan and lease losses.
Delinquent loans were $2.7 million in 2017 -- of which $2.3 million are associated with nonmember commercial loans that are not secured by real estate.
Approximately 87 percent of nonmember commercial loans not secured by real estate were at least 60 days or more delinquent.
N Y Team reported almost $1.3 million in troubled debt restructured (TDR) commercial loans at the end of 2017. TDR loans were 49.64 percent of the credit union's net worth.
Due to the 2017 loss, the credit union's net worth dropped from almost $2.9 million at the end of 2016 to $2.56 million as of December 31, 2017. As a result, the net worth ratio fell over the same time period from 8.07 percent to 7.12 percent.
The credit union was reporting allowance for loan and lease losses of almost $1.5 million as of December 31, 2017. However, it appears that the credit union may be under-reserved with a coverage ratio of 55.27 percent at the end of 2017. But this was better than the 2016 coverage ratio of 33.94 percent.
Van Cortlandt Cooperative Federal Credit Union (Bronx, NY)
Van Cortlandt Cooperative Credit Union was adversely impacted by non-performing non-member commercial loans not secured by real estate. Presumably, these loans were taxi medallion participations.
At the end of 2017, the $70.7 million credit union reported holding $10.6 in nonmember commercial loan participations.
After posting a loss on $3.2 million for 2016, the credit union had a 2017 loss of $603,157. The loss can be partially attributed to almost $1.3 million in provision for loan and lease losses to cover potential charge-offs of non-performing loans.
Delinquent loans were $8.8 million at the end of 2017. In other words, 30.60 percent of all loans were at least 60 days or more past due. Delinquent loans were 139.95 percent of the credit union's net worth.
Most of the delinquent loans were nonmember commercial loans not secured by real estate. Delinquent nonmember commercial loans not secured by real estate were $8.6 million. The delinquency rate on these loans was 81.20 percent.
In addition, almost $6.7 million of these loans were troubled debt restructured (TDR) loans. TDR loans were 23.24 percent of all loans and 106.28 percent of net worth, respectively.
Due to its 2017 loss, the credit union's net worth ratio fell from 9.82 percent at the end of 2016 to 8.89 percent at the end of 2017.
Furthermore, the credit union reported an almost $1 million increase in its allowance for loan and lease losses during 2017 to $4.4 million. Its coverage ratio was 50.01 percent as of December 2017.
The credit union has a combined net worth and allowance for loan and lease losses buffer of $10.7 million to absorb expected and unexpected losses.
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As with plane crashes, the NCUA experts are busy pointing fingers at the cu directors and cu management for these huge medallion business loan losses. Surely the directors and management are at fault and must be held accountable and responsible. The NCUA must be held accountable and responsible too. What do we know? We know the NCUA Examiner In Charge (EIC) did not restrain the credit unions from the load up on these medallions. We know the NCUA Concentration Rate Risk Specialist did not restrain the credit unions from the load up on these medallions. We know the NCUA authorized the sale of these toxic medallions down stream to unsuspecting credit unions. These credit unions desperate for additional income because of incompetent operating expenses looked at these medallions as short term profits to mask inflated operating expenses. A perfect storm. The medallions were a bubble in the monopoly market. The bubble popped with Uber & Lyft. Without the government monopoly on the medallion market it was a bankruptcy waiting to happen. Uber and Lyft capitalism popped the bubble. Without the bubbles in the Champagne its gone flat. Just like the wheels on the medallion taxi - all of them. The NCUA holds primary responsibility. As the Baby Sitter for the credit union community the NCUA were negligent to permit these credit unions to play in the medallion sand box - a sand box too deep to stand in. Without medallion lending expertise the credit unions are now in quick-sand. The life line: the credit unions not in the sand box, not in the quick-sand must come to the rescue. Assessments. Shame on the NCUA.
ReplyDeleteProgressive and Melrose. Regular Typhoid Marys spreading the virus.
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Nice job NCUA and ny state.
I am a member of Nassau Financial FCU and Town of Hempstead FCU and I read their call reports recently and cannot believe that they are going to survive. When will you analyze them so that I know when to close my account. It would appear that NFFCU had $43 Million or $35 Million (depending where you look in the call report) in medallion loans in Q3 report, but less than $1 Million were charged off and $13 Million (representing 25 loans) were reportable delinquencies. In Q4, Retained Earnings went down to $24 Million (from $33 Million in Q3), $0 (representing 0 loans) were reportable delinquencies. Yet somehow the "Commercial Loans excluding C&D" (page 15, Section 3(5)(d)) went from $43 Million (representing 75 loans) in Q3 to $24 Million (representing 46 loans) in Q4. Where did the 29 loans representing $19 Million go? There is no way NFFCU sold off 29 medallions for an average of $679,806! Not when medallions are averaging $175,000 at auction. When will we hear about how badly these CUs with medallion financed loans on their books are "Dead Men Walking"? They are failing and need to be held accountable by the NCUA.
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