BANKS TAKING ON LOSSES: Uber Pushing Taxi Medallion Prices Lower and Lower

“We are all concerned about the value of the collateral,” said Chief Operating Officer Raj Singh, of  BankUnited Inc., during a conference call with analysts.  The bank has lent $214 million against 577 medallions.

Banking regulators last month seized Montauk Credit Union, a small New York lender that weakened under the weight of medallion loans.

“It has happened very quickly,” said Robert Familant, chief executive of Progressive Credit Union. About 85% of the credit union’s $624.7 million loan portfolio is dedicated to taxi medallions.

About two-thirds of Melrose Credit Union’s $2 billion loan portfolio is connected to taxi medallions.

Medallions for New York City’s yellow cabs are now valued at between $700,000 and $800,000, down from more than $1.3 million in 2013, according to industry estimates. In Chicago, they are worth roughly $240,000, down from $360,000 in 2013, bank executives said.

But here is some superior alertness. WSJ reports:

Analysts say one company in this business that appears well-positioned to withstand the downturn is the one with “medallion” in its name.

When Medallion Financial Corp. reports earnings next week, analysts expect it will show a healthy capital cushion for any potential losses. The company owns 159 medallions in Chicago but sold off hundreds in recent years and unloaded its New York City licenses in 2013.

Andrew Murstein, Medallion’s president, said he decided to diversify into loans for recreational vehicles and boats while other lenders thought medallion values “would just go up and up and up.”

 -RW