NEW YORK—Problems for credit unions that make taxi medallion loans in the Big Apple did not abate in the first part of the year, according Q1 Call Report data.
And one analysts thinks the situation could worsen.
After reporting a loss of $19.5 million for all of 2015, Progressive Credit Union posted a loss of $15.8 million for the first quarter of 2016. Melrose CU, which lost $176.6 million last year, showed a loss of $5.6 million through Q1.
Due to the impact of ride-sharing services such as Uber, taxi medallions continue to decline in value and taxicab operators continue to experience a drop in revenues, impacting the performance of medallion loans.
Progressive’s large (37.22%) capital cushion positons the $635-million CU—better than any other credit union here—to ride out the decline in medallion values if medallion prices begin to return to more traditional levels. Progressive’s cushion fell about two percentage points from the end of last year.
Melrose CU’s net worth stood at 10.37% through Q1, down slightly from December but well off 18.44% at the end of 2014.
Keith Leggett, the former senior vice president and senior economist at the ABA, and author of the Credit Union Watch blog, does not see the trouble slowing.
“As of March 31, 2016, loans (at Progressive) 60 days or more past due were slightly less than $24.6 million. This was up from $20.8 million at the end of 2015 and $3.75 million as of March 2015,” observed Leggett. “At the end of the first quarter of 2016, 4.07% of the credit union's loans were delinquent. In addition, early delinquencies (30 to 59 days past due) jumped from $9.9 million at the end of 2015 to $32.3 million as of March 2016.”
Progressive reported a significant increase in trouble debt restructured loans (TDRs), which rose from $33.5 million at the end of 2015 to almost $89 million as of March 31, 2016, said Leggett.
“All TDRs were in nonaccrual status. TDRs represented 14.76% of all loans and 37.62% of its net worth at the end of the first quarter,” Leggett stated “Progressive had net charge-offs of almost $5 million at the end of the first quarter of 2016 compared to $1.3 million one year earlier.”
The $1.9-billion Melrose Credit Union reported that delinquent loans to total loans more than doubled between December 2015 (7.8%) and March 2016 (18.62%).
“As of March 2016, Melrose had almost $371 million in loans 60 days or more past due. This is up from $155 million at the end of 2015,” Leggett said. “Delinquent loans at the end of the first quarter equaled 185.71% of the credit union's net worth. In addition, there were more problems in the pipeline. The credit union is reporting that $72.85 million in loans were 30 to 59 days past due as of March 31, 2016.”