Thursday, November 1, 2018

Taxi Medallion Participation Loans Contribute to YTD Loss of $4.1 Million at Quorum FCU

Taxi medallion participation loans continue to adversely impact the financial performance of Quorum Federal Credit Union (Purchase, NY).

Quorum Federal Credit Union reported a year-to-date (YTD) loss of $4.1 million thru the end of the third quarter of 2018. The loss is up from $493,521 as of June 2018.

The third quarter loss was driven by a large increase in provision for loan and lease losses, which increased by $6.5 million during the third quarter to $15.24 million.

Delinquent loans increased by 6.3 percent during the third quarter to almost $43.9 million at the end of September 2018. As of September 30, 6.09 percent of the credit union's loans were 60 days or more past due.

Almost 71 percent of the delinquent loans ($31 million) were nonmember commercial loans not secured by real estate, which presumably were taxi medallion participation loans.

The credit union reported 58.51 percent of these nonmember commercial loans not secured by real estate were delinquent.

Quorum further reported that troubled debt restructured (TDR) commercial loans not secured by real estate of almost $23.7 million at the end of the third quarter of 2018. Approximately 34.4 percent of the TDR commercial loans were 60 days or more past due.

The credit union reported net charge-offs of $11.4 million as of September 2018, up from $10 million as of June 2018. As of September 2018, net charge-offs from commercial loans not secured by real estate were $6.8 million, of which $5.3 were TDR commercial loans.

Due to the third quarter loss of almost $3.6 million, the credit union's net worth fell to $63.2 million. Quorum's net worth ratio fell by 44 basis points during the third quarter to 7.61 percent, but was only down 4 basis points from a year ago.

However, the increase in provision for loan and lease losses caused the credit union's allowance for loan and lease losses to grow to almost $38 million, up from $32.9 million as of June 2018. As a result, the coverage ratio rose to 86.56 percent as of September 2018 from 79.63 percent on June 30, 2018.


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