Troubled taxi medallion participation loans contributed to a large 2018 loss at Quorum Federal Credit Union (Purchase, NY).
The credit union contracted by almost 5 percent during 2018 to $817.5 million at the end of 2018.
Its portfolio of commercial loans not secured by real estate fell by $14.5 million during 2018 to $49.9 million. Presumably all or most of these loans were taxi medallion participation loans. Quorum FCU ended its taxi medallion participation loan in 2013.
After recording a profit of $1.8 million for 2017, Quorum FCU reported a full year loss just shy of $8.3 million. During the fourth quarter, the credit union saw a loss of $4.16 million.
The loss was driven by a $5.8 million increase in provision for loan and lease losses during the fourth quarter of 2018 to $21.1 million.
Due to the loss, the credit union's net worth fell from $67.3 million at the end of 2017 to $59 million at the end of 2018. The credit union's net worth ratio dropped by 60 basis points over the same time period to 7.22 percent.
As of December 2018, the credit union reported almost $38.7 million in delinquent loans -- down 11.9 percent from the prior quarter. This translates to 5.50 percent of its loan portfolio being 60 days or more past due.
Almost 71 percent of the delinquent loans were nonmember commercial loans not secured by real estate.
In addition, 58.28 percent of nonmember commercial loans not secured by real estate were 180 days or more delinquent with the vast majority of these loans being at least 360 days past due.
Net charge-offs at Quorum were almost $18.4 million for 2018. This was up from $8.1 million for 2017. At the end of 2018, the net charge off rate was 2.55 percent.
Taxi medallion participation loans accounted for almost $11.17 million of the net charge-offs for 2018.
At the end of 2018, allowance for loan and lease losses at Quorum were $36.8 million. Its coverage ratio (allowance for loan and lease losses to delinquent loans) was 95.11 percent.
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