Posting a net loss of $57 million at the end of the secondquarter of 2016, primarily because of its underperforming taximedallion loan portfolio, the $1.9 billion Melrose Credit Union is undercapitalized, according to its June2016 call report.

Melrose posted a net worth of 7.49% at the end of the secondquarter compared to its net worth of 18% at the end of the secondquarter of 2015.

However, because Melrose is considered to be a complexcooperative by the NCUA, its risk-based net worth requirement was9.89%, which classified the Briarwood, N.Y.-based credit union asundercapitalized, according to its call report.

The undercapitalization places Melrose into prompt correctiveaction and requires it to submit a net worth restoration plan tothe NCUA within 45 days as of July 31, according to the agency'sregulations.

Melrose did not return a phone call and email from CUTimes Friday seeking comment.

The growing popularity of app-basedride-sharing services, such as Uber and Lyft, have taken asignificant toll on Melrose's bottom line and other cooperatives.Melrose manages more than 3,000 taxi medallion loans totalingapproximately $1.5 billion.

According to its June 2016 call report, Melrose has 450 troubleddebt restructured loans worth more than $358 million. The creditunion's March 2016 call report recorded 445 TDR loans that totaled$376 million.

However, the credit union posted 724 delinquent loans totaling$435 million at the end of the second quarter on June 30, 2016. Atthe end of the first quarter on March 31, Melrose recorded 542delinquent loans that totaled $374 million.

The credit union's loan income dropped significantly to $29million at the end of the second quarter of 2016 compared to loanincome of $39 million at the end of the second quarter of 2015.

Alan Kaufman, who served as president/CEO of Melrose since1982, left in July. He was replaced by Steven Krauser, who was appointed interim president/CEO abouttwo weeks after Kaufman's departure.

According to a prepared statement released when Krauser'sappointment was announced, the credit union said medallion loanswill still be prominent in Melrose's portfolio but that Krauserwill lead the credit union in a new direction to develop otherlending and investment products.

In the prepared statement, Krauser said the credit union hasincreased its staff by 10%, including doubling its credit analysisand lending team staff, and adding business people to seniormanagement. The senior managers were not identified in the preparedstatement.

Other credit unions with large taxi medallion portfolios are the$634 million Progressive Credit Union in New York City and the $252million LOMTO Credit Union in Woodside, N.Y.

Progressive posted a $19.3 million net loss at the end of thesecond quarter. Its net worth is at 36% as of June 30, down from39% on June 30, 2015.

Progressive had 233 TDR loans totaling $107 million at the endof the second quarter, compared to 192 TDR loans totaling $88million at the end of the first quarter of 2016. The credit unionalso posted 193 delinquent loans totaling $48 million at the end ofthe second quarter, while at the end of the first quarter, thecooperative recorded 119 delinquent loans that totaled $24million.

LOMTO had a net loss of $4.2 million as of June 30 and a networth of 11%, down from 16% in June 2015.

At the end of March 2016, LOMTO posted 101 TDR loans worth $35million and by the end of the second quarter on June 30 had 98 TDRloans that totaled $34 million.

The credit union's delinquent loans totaled 75 worth $23 millionat the end of the second quarter, while at the end of the firstquarter, LOMTO posted 62 delinquent loans that totaled $22million.