Wednesday, July 29, 2015

Taxi Medallion Lender Montauk CU Financial Update

Yesterday I reported on the financial performance of Melrose Credit Union. Today, I will look at Montauk Credit Union, which is the smallest of the New York taxi medallion credit unions with $178.5 million in assets.

During the second quarter of 2015, Montauk saw a doubling of loans 60-days or more past due. Delinquent loans rose from $3.2 million at the end of the first quarter to $6.4 million as of June 2015. As of the end of the second quarter, the credit union reported that 3.83 percent of all loans were delinquent.

One encouraging development was a decline in early delinquencies (loans 30 to 59 days past due), although early delinquencies remain elevated. Early delinquencies fell from $53.1 million as of March 2015 to almost $28.1 million as of June 2015.

Montauk reported that outstanding trouble debt restructurings (TDRS) of almost $28.5 million. This compares to outstanding trouble debt restructurings of zero dollars as of last quarter. As of June, troubled debt restructurings were equal to 154.4 percent of the credit union's net worth. Slightly less than $9.8 million of these TDRs are in nonaccrual status.

Due to the rise in problem loans, Montauk has increased its provisioning for loan and lease losses. During the second quarter, provisions increased by almost $3.56 million to $3.66 million. As a result, the credit union reported a loss of approximately $2.9 million for the second quarter and had a year-to-date loss of $2 million.

As of June, the credit union has built its allowances for loan and lease losses (ALLL) to almost $5.6 million up from $2 million from the previous quarter. This caused the credit union's coverage ratio (ALLL to Delinquent Loans) to climb from 63.48 percent to 87 percent over the quarter.

Due to its second quarter loss, Montauk's equity capital fell from $21.4 million to $18.5 million. Its net worth ratio fell from 12.32 percent as of March to 10.34 percent as of June.

The credit union has a buffer (capital plus ALLL) to absorb expected and unexpected losses of slightly more than $24.1 million.

Tomorrow I will report on Progressive Credit Union.
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