Friday, February 2, 2018

Taxi Medallion Participation Loans Hit Connecticut and Rhode Island CUs

It appears that nonperforming taxi medallion loans affected the 2017 performance of 360 Federal Credit Union (Windsor Locks, CT) and Postal Government Employees Credit Union (Providence, RI).

360 Federal Credit Union

The credit union is reporting at the end of 2017 that it held almost $11.4 million in commercial participation loans, presumably these loans were taxi medallion loans. This is down from $14.6 million at the end of 2016. These commercial loans at the end of 2017 represented 7.05 percent of all loans.

360 Federal Credit Union reported a loss of almost $3.12 million for 2017. In comparison, the credit union reported a loss of nearly $736 thousand for 2016.

The significant increase in the 2017 loss was due to $4.4 million in provision for loan and lease losses.

As a result of the loss, the $224 million credit union saw its net worth fall from $23.2 million at the end of 2016 to $20.1 million on December 31, 2017. The credit union's net worth ratio fell from 10.45 percent at the end of 2016 to 8.95 percent at the end of 2017.

This increase in provision for loan and lease losses was to address $3.1 million in delinquent loans, of which $2.3 million were commercial loans to non-members not secured by real estate.

While the delinquency rate for its entire loan portfolio was 1.95 percent at the end of 2017, the delinquency rate on commercial participation loans of 20.38 percent.

The credit union reported that troubled debt restructured commercial loans more than doubled from $1.15 million at the end of 2016 to almost $2.5 million at the end of 2017.

The credit union is also reporting that net participation loan charge-offs of $673,461. This translates into a net charge-off rate for participation loans of 5.19 percent.

The increase in provision for loan and lease losses helped to build the credit union's allowance for loan and lease losses by almost $3 million during 2017 to $5.5 million. The credit union has a coverage ratio (allowance for loan and lease losses divided by delinquent loans) of 175.30 percent, which means that it is over-reserved.

The credit union has a total buffer (net worth plus allowance for loan and lease losses) of $25.6 million, which appears to be sufficient to absorb problems coming from its taxi medallion loans.

Postal Government Employees Credit Union

It appears that Postal Government Employees Credit Union used the fourth quarter to clean up its balance sheet with regard to commercial loan participations, which were most likely taxi medallion loans.

At the end of the third quarter, the credit union reported holding 6 purchased commercial loans or participations to non-members at a value of $3.3 million, of which all were delinquent. At the end of 2017, the credit union reported holding only one loan valued at $339 thousand.

The credit union saw an 85.4 percent decline in delinquent loans during the fourth quarter of 2017, as net charge-offs increased by almost $2.6 million to approximately $2.7 million. Net charged-off participation loans rose zero at the end of the third quarter to almost $2.6 million at the end of 2017.

To enable the credit union to charge-off these loans in the fourth quarter, the $45 million credit union increased provisions almost 19 fold from the end of 2016 to nearly $1.2 million.

As a result, the credit union went from posting a profit for 2016 to a loss of $820,249 for 2017.

The credit union's net worth fell from $5.2 million at the end of 2016 to $4.4 million. The net worth ratio fell 193 basis points over the same time period to 9.79 percent.


  1. The NCUA should be quite proud. Endorsing all these credit unions with NCUA Specialists & the Examiner In Charge they were all in. Something wrong? How do you say: concentration risk? Seriously. Shout out to the NCUA: How did you village idiots miss the ramp up/load up/bulk up of these toxic taxi medallions? Drinking the Duke Street Kool-Aid & eating the Duke Street are on a crack pipe high. Hello, NCUA EIC can you say: Document of Resolution? How about: Cease & Desist? Read the chapter on Special Actions. You learned nothing from the corporate credit union collapse. Step up into the next NCUA pay grade. You guys deserve it. With all the red ink from these medallions, our next exam will be a rectal exam - go all in. NCUA: you rect'em! Result: ASSessments. The bleed out continues.

  2. I must agree with Tony. And with all due respect to the MAFIA they must hate the NCUA. The MAFIA collects juice, tribute & engages in various manifestations of shakedown. The US defines these collection practices as unlawful and criminal. However the NCUA imposes annual operating fees and premiums on its victims and it is all perfectly legal. Additionally as Tony observed the NCUA impose arbitrary and capricious assessments on their victims at will and with reckless abandon. All these manifestations of shakedown that borders on extortion are NCUA approved and the NCUA has a corner on the market. The NCUA has an absolute MONOPOLY. The Mafia must hate the competition.

  3. NCUA defies congress and adds 1000 “low income” credit unions who get expanded powers including issuing capital, adding more business loans above the cap that all,other credit unions have to abide by. This arbitrary action gave a total of 2000 credit unions a bank charter that doesn’t pay taxes.
    Now, NCUA allows Jefferson financial to raise capital and “acquire “ a credit union in a different state who is under conservatorship from bad practices which NCUA should have stopped thru normal supervision.
    The capital is bought by other credit unions.
    The ONLY reason NCUA still exists is because congress is more corrupt and ineffective than even NCUA.

  4. The stains of the NCUA on the credit union community are far worse than Bill's stains on Monica's blue dress. The NCUA stains leave a bitter taste at a bitter cost to the credit union community that must continue to pay for NCUA transgressions of negligent oversight, careless supervision, and inept supervision.



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