On its Q3 2017 quarterly earnings conference call held on October 31, 2017, BKU discussed its exposure to New York City taxi medallions. BKU's taxi medallion loan book now totals $120.6MM, equivalent to 0.3% of the aggregate value of all NYC taxi medallions. (Taxi medallion loans comprise 0.6% of BKU's net loans.)
As of September 30, 2017, BKU reduced its valuation per NYC taxi medallion by 19% to $351,000, from $432,000 as of June 30, 2017.
President and CEO Singh said that, in addition, BKU took a further 15% haircut which essentially brought medallion valuations to "a tad under $300,000".
Putting a finer point on the accounting machinations of their medallion valuation process, CEO Lunak stated that although BKU did not take charge-downs below $351,000, BKU did put up an additional "specific reserve" representing an additional 15% haircut to medallion valuations.
Also, CFO Lunak stated that in Q3, BKU put the entire taxi medallion loan portfolio on non-accrual. As a result: 1) interest is not being recognized as income; and, 2) all cash flow, whether principal or interest, goes toward reduction of the principal of the loans.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.