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Bad Taxi Medallion Loans Pushes Melrose CU into Conservatorship "Credit News 24"

The New York State Department of Financial Services today took possession of Melrose Credit Union, located in Briarwood, New York, and appointed the National Credit Union Administration as conservator.

Bad taxi medallion loans eroded the financial performance of Melrose Credit Union and pushed the credit union into conservatorship.

The credit union reported a 2017 loss of almost $98.7 million, after posting a loss for 2015 of $176.7 million.

Provisioning for loan and lease losses contributed to the loss, as Melrose recorded provisions for loan and lease losses of $110.3 million for 2017.

As a result of the loss, the credit union's net worth fell sharply to $102.2 million at the end of 2017. In comparison, the credit union's net worth was $205.2 million at the end of 2015 and $145.1 million as of September 2017.

The credit union was undercapitalized at the end of 2017 with a net worth ratio of 5.73 percent.

Delinquent loans grew during the quarter by almost $80 million to $501.4 million as of December 2017.

At the end of 2017, 28.64 percent of all loans were 60 days or more past due. Delinquent loans to net worth ratio was 490.41 percent.

In addition, the credit union is reporting that early delinquencies (30 days to 59 days past due) of $62.6 million.

Net charge-offs were $191.4 million at the end of 2017. The net charge-off rate was 10.23 percent.

Troubled Debt Restructured (TDR) loans were $248.7 million, as of December 2017. TDR loans were 14.21 percent of total loans and 243.25 percent of net worth.

Melrose reported an increase in allowance for loan and lease losses (ALLL) of $47 million during the fourth quarter to $149.2 million. The credit union's coverage ratio (ALLL to Delinquent Loans) was 29.76 percent, as of December 2017. The TDR portion of ALLL was almost $44 million.

Melrose reported shedding $166 million in assets during the fourth quarter. At the end of 2017, the credit union had $1.78 billion in assets.


Read the press release.


Title : Bad Taxi Medallion Loans Pushes Melrose CU into Conservatorship "Credit News 24"
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