Problem Taxi Medallion Loans Cause Surge in TDRs at San Francisco FCU

Problem taxi medallion loans cause a surge in troubled debt restructured (TDR)commercial loans at San Francisco Federal Credit Union.

San Francisco FCU is suing the San Francisco Municipal Transportation Agency over the collapse of the taxi medallion market in San Francisco.

The credit union reported $45.2 million in commercial loans not secured by real estate at the end of the second quarter. Presumably most of these loans were to finance taxi medallions.

TDR commercial loans jumped from almost $2 million as of June 2017 to $13 million as of June 2018 (click on image to enlarge). Roughly 29 percent of all commercial loans were TDRs.

As of June 2018, only 2.35 percent of all TDR commercial loans were at least 60 days past due.

The credit union reported that delinquent commercial loans were $1.84 million -- this is down from $2.2 million at the end of the first quarter of 2018 and $4.64 million a year ago. the delinquency rate on commercial loans was 4.08 percent. Delinquent commercial loans were approximately 56 percent of all delinquent loans.

The credit union reported net charge-offs at mid-year of $2.175 million. About $1.68 million of net charge-offs were commercial loans.

Despite the rise in TDR commercial loans, San Francisco FCU was profitable and well capitalized. The credit union reported a net income of $2.23 million through the first two quarters of 2018. Its net worth ratio was 10.09 percent -- up 20 basis points from the prior quarter.

In addition, the credit union was over-reserved at the end of the second quarter of 2018 with $16.6 million in allowance for loan and lease losses. Its coverage ratio was 507.71 percent.