ALEXANDRIA, Va.–Since Montauk CU in New York City was placed into conservatorship last year, the credit union has taken several steps to address financial and management issues affecting the safety and soundness of its operations, NCUA reported.
The New York State Department of Financial Services placed Montauk into conservatorship on Sept. 18, 2015 and appointed NCUA as conservator. The majority of Montauk’s lending is in taxi medallion loans. The value of taxi medallion loans in New York—as well as in other cities across the U.S.—has dropped markedly due to ride sharing services such as Uber.
At the time of conservatorship, NCUA data showed that Montauk delinquencies rose to 2.96% through June, and had been steadily increasing in the past year. In just six months, ROA dropped from 1.09% at the close of 2014 to -2.36% through June. Capital fell from 12.35% at the end of the year to 10.34% by the end of June.
Year-end Call Report data shows Montauk lost 17.6 million last year, with most of the net-income loss coming in the fourth quarter.
Currently, Montauk has assets of $162.1 million and 2,830 members, according to its year-end Call Report data. As of Dec. 31, Montauk reported a net worth of $2.8 million and a net worth ratio of 1.74%, which the Federal Credit Union Act classifies as critically undercapitalized. Total shares and deposits were $158.2 million. The allowance for loan losses increased from $5.5 million to $21.9 million during the quarter, and net loans were $143.8 million at the end of the quarter.
Among other steps taken during the conservatorship, Montauk worked with members, where appropriate, to address identified issues. As a result, the credit union has modified $60.6 million in loans, NCUA stated. The credit union hired experienced loan workout specialists to assist with its collections process. The credit union also retained professional accounting guidance to determine the adequacy of its allowance for loan and lease losses.
The threat to the taxi business in New York, as well as to CUs that make medallion loans here, had prompted a group of New York credit unions last year to sue the city, alleging Uber is operating illegally. The four CUs—Montauk, $2.1-billion Melrose CU, $692-million Progressive CU, and $278-million LOMTO FCU—lost their lawsuit.