RALEIGH, NC (July 29, 2016) — Sageworks, a financial information company that provides loan portfolio solutions to banks and credit unions across the country, recently expanded its product suite to include a solution for taxi-medallion lending.
Banks and credit unions that offer loans to finance the purchase of taxi medallions are currently facing a common challenge; the value of medallions has substantially decreased in the past couple of years due to new transportation services such as Uber and Lyft. As a result, many of those loans became impaired, and, for financial institutions that have a sizable tax-medallion concentration, the Allowance for Loan and Lease Losses has increased substantially. Sharp increases in the reserve create significant pressure on capital as well as earnings.
“For the credit unions and banks that are heavily involved in medallion-lending, that part of their portfolio is a source of a lot of scrutiny right now from examiners, loan review and auditors. Are they underwriting those loans properly to begin with? Are they servicing them the way they should? And are they appropriately reserving for those loans? Without a documented and consistent process, medallion-lending institutions can have a hard time defending their decisions,” says Sageworks Director of Strategy Peter Brown.
The company partnered with a few strategic lenders in the taxi-medallion space, including Melrose Credit Union of Briarwood, NY, to create an automated life-of-loan process for medallion loans within Sageworks’ solutions. Customizations include a specialized credit memo, customer or member workflows for processing and approval, pricing scenarios, risk rating templates, stress tests, etc.
Previously Sageworks clients could build customized workflows in the software. The taxi-medallion templates, however, are the first completely templated life-of-loan process and take into account the unique elements of medallion lending. With Sageworks, institutions are prepared to mitigate credit risk, strengthen their loan loss methodology and provide a consistent analysis that is more defensible to auditors, examiners and the board. The Sageworks platform will help these institutions improve turnaround times for loans and strengthen C&I, CRE or member business lending, which may be alternative sources of income and growth to offset increases in the ALLL.
Additionally, Sageworks is aggregating financial performance data for firms in the Taxi Service NAICS code. With this industry information, Sageworks clients will be able to score taxi companies and assess their financial health relative to industry benchmarks.
To learn more about Sageworks Lending Platform for Taxi Medallions, visit web.sageworks.com/tax-medallion-lending/. For additional risk management resources, or to learn more about the Sageworks suite of solutions, visit SageworksAnalyst.com.
Sageworks offers banks and credit unions lending, credit risk and portfolio risk software to efficiently grow and improve the borrower experience. By automating the life of the loan with Sageworks, bankers book commercial loans faster and reduce risk. Sageworks uniquely provides integrated solutions and industry expertise to more than 1,400 financial institutions that achieve an average 38% higher loan growth than peers. Visit www.sageworks.com to learn more.
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Email: research@sageworks.com
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