Taxi Medallion Lender Melrose's Net Worth Ratio Is Minus 24.75 Percent

Plummeting taxi medallion values created a deeper hole for taxi lender Melrose Credit Union (Briarwood, NY). Melrose Credit Union was placed into conservatorship on February 10, 2017.

The credit union reported a loss of $111.2 million for the first quarter of 2018, due to a provision for loan and lease losses of $102.1 million for the quarter.

Due to the quarterly loss, the credit union's net worth fell to negative $299.1 million as of March 31, 2018. The credit union's net worth ratio was a minus 24.75 percent at the end of the first quarter, compared to minus 13.79 percent the prior quarter.

Commercial loans not secured by real estate were $952.6 million as of March 2018 -- down from $1.226 billion as of September 2017. Most, if not all of these loans, were to finance taxi medallions. As of March 2018, almost 79 percent of the credit union's assets were in commercial loans not secured by real estate.

Melrose reported $450.6 million in delinquent loans at the end of the first quarter of 2018. This was down 5 percent from the prior quarter. Almost one third (32.74 percent) of the credit union's loans were 60 days or more past due.

The credit union had $438.6 million in delinquent member commercial loans not secured by real estate. This means that 46.49 percent of its non-real estate member secured commercial loans were at least 60 days past due.

Melrose recorded a net charge-off of $35.5 million during the first quarter, after reporting net charge-offs of $195.6 million for all of 2017. All of the net charge-offs during the first quarter were commercial loans not secured by real estate.

In addition, troubled debt restructured commercial loans not secured by real estate were $227.2 million, according to the most recent call report. Roughly 64 percent of these TDR commercial loans were delinquent.

Due to the increase in provision for loan and lease losses in the first quarter, the credit union reported a 29 percent increase in allowance for loan and lease losses to $306.6 million. The credit union's coverage ratio (allowance for loan and lease losses divided by delinquent loans was 68.04 percent, up from 50.09 percent from the previous quarter.

At the end of the first quarter, Melrose has drawn $191 million of its $300 million credit lines at corporate credit unions. These credit lines are guaranteed by the National Credit Union Share Insurance Fund.