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ConnectOne Bancorp's Q3 2017 Guidance On NYC Taxi Medallion Values

|About: ConnectOne Bancorp (CNOB)

Summary

CNOB wrote down NYC taxi medallion marks to $348,000

CNOB's taxi medallion loans all on non-performing status

CNOB's taxi medallion loan book is on "held for sale" status but may return to "held for investment" status

Note: This piece is focused narrowly on taxi medallions

On its Q3 2017 quarterly earnings conference call held on October 26, 2017, ConnectOne Bancorp discussed its exposure to New York City taxi medallions.  CNOB's NYC taxi medallion loans total $44.7MM, equivalent to 1% of the aggregate value of all NYC taxi medallions.  (Taxi medallion lending comprises 1.1% of CNOB's net loans receivable.)

As of September 30, 2017, CNOB reduced its valuation per NYC taxi medallion to $348,000 from $374,000 as of June 30, 2017.

CNOB had put its taxi medallion loan book on "held for sale" status but is considering returning it to "held for investment" status since the portfolio is cash flowing and anticipated institutional buyers are not yet ready to buy portfolios.  Currently, the taxi medallion loans are on non-accrual, so: 1) interest is not being recognized as income; and, 2) all cash, whether principal or interest, is going to reduce the principal of the loans.


Chairman and CEO Sorrentino stated that it appears the pendulum is beginning to swing in the favor of medallion cabs.

Analysts on the call did not inquire as to whether the description of a cash flow return of 5% or 6% included interest alone or both interest and repayment of principal.

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