Quorum Federal Credit Union (Purchase, NY) is reporting an increase in delinquencies at the end of 2017, as non-performing taxi medallion loans partially impact the credit union's performance.
The credit union is reporting $64.4 million in commercial loans not secured by real estate. Presumably, most or all of these loans are colateralized by taxi medallions.
The credit union posted a profit of $1.8 million at the end of 2017, after recording a loss of $6.7 million for 2016.
The improvement in earnings was due to a reduction in provision for loan and lease losses in 2017 compared to 2016. The credit union recorded a $10.1 decline in provision to loan and lease losses in 2017 to $14.4 million.
While the growth in provisioning for losses declined, delinquencies at the $860 million credit union rose. Over the year, delinquencies increased by 56.2 percent to almost $54.7 million at the end of 2017. As of December 2017, 7.43 percent of all loans were delinquent.
In addition, early delinquencies (30-to-59 days past due) increased by 178 percent during the fourth quarter of 217 to $11.6 million.
The credit union is reporting at the end of 2017 that $41.5 million of the $54.7 million in delinquent loans were participation loans.
The credit union is reporting troubled debt restructured (TDR) commercial loans not secured by real estate of $23.4 million at the end of 2017. Approximately $13.9 million of these TDR commercial loans not secured by real estate were 60 days or more past due.
The credit union posted a small increase in net worth for 2017 to $67.3 million. This small increase in net worth coupled with a $41.6 million shrinkage in asset size caused Quorum's 2017 net worth ratio to increase by 57 basis points from a year ago to 7.82 percent.
During 2017, allowance for loan and lease losses rose by $6.3 million to $34.15 million. However, because delinquencies grew at a faster rate than reserves for loan losses, the credit union's coverage ratio slipped from 79.51 percent at the end of 2016 to 62.48 percent as of December 2017.
I will be interested in reading Quorum's 2017 Annual Report, when it is released as it will provide more clarity about the actual performance of its taxi medallion participation portfolio and its assessment of the value of taxi medallion loans at the end of 2017.
The dq dollars are essentially greater than the capital dollars. Especially when you consider tdr.
ReplyDeleteAnd, it’s not all taxi loans.
This cu is done.
Another great supervisory job.
Kicking the can.
Forbearance.
Taxi loans.
Doctor loans.
Vacation time share loans.
Yup, definitely “in the mission” of serving the underserved.
Who’s in your wallet?
Looking at Melrose, Progressive, Chetco, Telesis, WesCorp, MembersUnited, USCentral and now...we have a QUORUM. Can the NCUA recognize a trend in these threads? Threads to string, to rope, to a noose around the surviving credit unions. What is the noose? Can you say the word: assessments? The NCUA will need to increase operating fees for the additional work required to babysit these TDR credit unions into conservatorship and liquidation. Need proof? Read the NCUA business plan for WesCorp, USCentral, MembersUnited, etc. Who's in your wallet? Answer: NCUA. Just look at the QUORUM mess: Compare Year end 2014 to year end 2017.
ReplyDelete2014 Assets $870M Net Worth: 7.90%
2017 Assets $860M Net Worth: 7.82%
The NCUA calls this: Shrinking Your Way to Success. Shrink the assets to keep Net Worth above 7.0% Genius.
2014 Loans: $731 M Net Income: $2.6M
2017 Loans: $735M Net Income: $1.8M
NCUA calls this: Making It Up in Volume. Add more loans and earn less income. Brilliant.
9-2014 Salary Avg: $142,000
9-2017 Salary Avg: $150,000 Peer: $78,000
NCUA calls this: Rewarding Bad Behavior. Step up into a higher pay grade.
Time Share Loans, Taxi Medallion Loans. Is this serving the underserved? Is this self-serving credit union management? Pass the crack pipe - we all need to take a hit before the NCUA assessment hit. The lights are on at the NCUA. Is anyone home? Is the Capital Market Specialist, and Interest Rate Specialist all that special?