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Title : Melrose Credit Union: May Day! May Day!

Melrose Credit Union: May Day! May Day!

First quarter 2016 data show a sharp deterioration in the financial performance of taxi medallion lender Melrose Credit Union (Briarwood, NY), as the taxi industry is disrupted by ridesharing companies.

The $1.9 billion credit union reported that delinquent loans more than doubled between December 2015 and March 2016. 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.

As of March 2016, 18.62 percent of Melrose's loans were delinquent compared to 7.80 percent of loans at the end of 2015 (click on image to enlarge).

Delinquent loans at the end of the first quarter equaled 185.71 percent 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.

The credit union also reported almost $376.7 million in trouble debt restructured (TDR) loans as of March 2016. All TDR loans are in nonaccrual status. TDR loans represent 18.91 percent of all loans and 188.67 percent of net worth.

Melrose reported a loss of almost $5.6 million, as it recorded provisions for loan and lease losses of $11.3 million during the first quarter of 2016.

Melrose reported that its allowance for loan and lease losses was $241.7 million as of March 31, 2016, of which $145.4 million was allocated to TDR loans. Its March 2016 coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 65.18 percent -- down from 148.25 percent at the end of the prior quarter.

The credit union as of March 2016 held $199.6 million in net worth. Its net worth ratio was 10.37 percent -- down 32 basis points from the previous quarter.

This means that the credit union has a buffer of slightly more than $441 million to absorb expected and unexpected losses.

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