Quorum Federal Credit Union (Purchase, NY), which participated in taxi medallion loans, posted a profit for the second quarter of 2018.
The credit union's net income was $2.24 million for the second quarter, after posting a loss of $2.74 million for the first quarter of 2018.
As a result of the second quarter profit, the $829 million credit union's net worth rose to $66.8 million as of June 2018 from almost $64.6 at the end of March 2018. The combination of improved earnings and the shedding of almost $38.4 million in assets caused the credit union's net worth ratio to increase by 61 basis points during the quarter to 8.05 percent.
The credit union has approximately $56.7 million in commercial loans not secured by real estate. Presumable most, if not all, of these loans were taxi medallion participation loans.
The credit union saw a 3.4 percent decline in delinquent loans during the second quarter to $41.3 million. But slightly more than 75 percent of all delinquent loans were participation loans.
The delinquency rate was basically unchanged at 5.88 percent.
Troubled debt restructured (TDR) commercial loans rose by 1 percent during the quarter to approximately $23.8 million. The credit union reported that nearly $8.1 million of TDR commercial loans were 60 days or more past due. The delinquency rate on TDR commercial loans was 33.99 percent.
Net charge-offs were almost $10 million at the end of the second quarter, up from $6.9 million from the prior quarter. Net charge-offs of participation loans were $6.8 million as of the end of the second quarter, of which $3 million were TDR commercial loans not secured by real estate.
The net charge-off rate was 2.78 percent as of June 2018.
Provisions for loan and lease losses increased at the credit union by $2.4 million to $8.7 million.
But the increase in provisions for loan and lease losses was outpaced by net charge-offs, this caused the allowance for loan and lease losses to decline by almost 2 percent to $32.9 million. The coverage ratio for the credit union rose to 79.63 percent in June 2018 from 78.44 percent in March 2018.
Here we go again. Shrinking your weigh to success! Assets decrease from June, 2017 at $874M to $829M in June, 2018. Assets decrease and bingo Net Worth increases to 8.05% - how do you say: Hat Trick? ROA in June, 2017 was -0.62% it has improved to -0.12 in June, 2018. With a loan to share ratio of 92.0% one would expect a positive ROA. But when delinquency is racing at 5.88% and charge offs are a robust 2.78% a positive bottom line in not in the cards. And so the income statement continues to bleed. Give the CEO a Medallion for loading up on toxic taxi loans. Increase the loan to share ratio to 100% and shoot to make it up in volume. If it fails the NCUSIF will payoff the depositors so little downside gamble. If the gamble pays off grease the CEO like a pig at the trough. For the best play book get the Melrose CU business plan. Did the NCUA concentration risk specialist miss something here? Where is the NCUA EIC? This train wreck was building over a period of time - where was the NCUA to miss it? Can we write a DOR (Document of Resolution) for the NCUA? Can we issue Special Actions for the NCUA? NCUA is a CAMEL Code 5. Shut it down. Can we issue Enforcement Actions on the NCUA? Why are they always stuck on stupid?
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