NCUA Closes Second Credit Union With Taxi Medallion Loans
LOMTO piles up $16.5 million in losses in the first half of 2018.
Teachers Federal Credit Union on Long Island acquired members, deposits, about $5 million to $7 million in loans, and other assets from LOMTO ($156.2 million in assets, 2,283 members as of June 30). It acquired none of LOMTO’s commercial loans not backed by real estate, the NCUA classification that includes loans backed by taxi medallions, said Bill Corbett Jr., a publicist for Teachers FCU.
The LOMTO liquidation occurred Sunday, the last day of the quarter. As in the Aug. 31 liquidation of Melrose Credit Union, NCUA retained an unspecified amount of LOMTO’s loans, including all taxi medallion loans.
New York City began issuing the medallions in the 1930s to regulate the taxis and help drivers earn a living wage. The medallions were used as collateral for loans, but the rise of Uber, Lyft and other ride-sharing services caused their value to drop from a high of $1.3 million in 2011 to $181,000 in June.
Melrose and LOMTO were among the largest holders of taxi medallion loans among the nation’s credit unions, and together held nearly $1 billion in commercial loans not backed by real estate as of June 30.
NCUA has so far declined to provide amounts of the loans it has retained in the deals, including the value of commercial loans not backed by real estate or the value of taxi medallion loans.
Asked last week whether NCUA would be providing a call report or its equivalent for the loans it has retained from Melrose, NCUA spokesman John Fairbanks said Monday a call report was not required because Melrose did not operate on the last day of the quarter.
Fairbanks said Monday a third-quarter report would not be issued for LOMTO.
Asked how much impact LOMTO’s liquidation would have on the NCUA share insurance fund, Fairbanks said “the NCUA has funded for the potential losses.”
Melrose and LOMTO, which came under NCUA conservatorship in 2017, had net worth ratios well under the NCUA’s “critically undercapitalized” designation, which applies to credit unions with net worth ratios under 2%. Melrose’s ratio was -32% on June 30, down from -24.8% on March 31 and 2.7% at the end of 2017’s second quarter. LOMTO’s was -34.6%, down from -24.1% on March 31 and 1.3% a year ago.
In the six months ending June 30, LOMTO ($156.2 million in assets, 2,283 members as of June 30) had lost $16.5 million, following losses of $83.1 million from 2015 through 2017. On June 30, it held $120.4 million in commercial loans not backed by real estate, a category that includes loans backed by taxi medallions, of which 66.9% were at least 60 days delinquent.
Melrose of Briarwood, N.Y. ($1.1 billion in assets, 19,864 members as of June 30) lost $171.8 million in the first half. It held $833.2 million in commercial loans not backed by real estate, of which 42.5% were delinquent at least 60 days. The credit union described the entirety of that class as taxi medallion loans in 2015.
Teachers FCU of Hauppauge ($6.1 billion in assets, 300,541 members as of June 30) said it plans to keep open both of will keep open LOMTO’s two locations in Woodside, Queens, and Manhattan, adding to Teachers FCU’s 28 branches in Queens, Nassau and Suffolk counties.