Medallion Financial Corp. Reports 2023 Third Quarter Results
October 30 2023 - 3:02PM
Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the
“Company”), a specialty finance company that originates and
services loans in various consumer and commercial industries, along
with offering loan origination services to fintech strategic
partners, announced today its results for the quarter ended
September 30, 2023.
2023 Third Quarter
Highlights
- Net income was $11.2 million, or
$0.48 per share, compared to $7.6 million, or $0.32 per share, in
the prior year quarter.
- $5.7 million of cash was collected
on taxi medallion-related assets, with recoveries resulting in
earnings of $0.10 per share.
- Net interest income grew 16% to
$48.8 million from $42.0 million in the prior year quarter.
- Net interest margin on net loans
was 8.64%, compared to 8.91% in the prior year quarter, and on
gross loans it was 8.35%, compared to 8.63% in the prior year
quarter.
- Loan originations were $217.4
million, compared to $273.7 million in the prior year quarter.
- Loans grew 19% to $2.2 billion as
of September 30, 2023, compared to $1.9 billion a year
ago.
- The credit loss provision increased
to $14.5 million from $10.0 million in the prior year quarter.
- Total assets grew to an all-time
high of $2.6 billion at September 30, 2023, a 16% increase
over September 30, 2022.
- Subsequent to September 30, 2023,
the board of directors increased the quarterly dividend 25% to
$0.10 per share.
Executive Commentary – Andrew Murstein,
President of Medallion
“We continue to be pleased with our strong
results. Our earnings of nearly $41 million for the first nine
months of the year were up 32% compared to last year. This is our
highest net income for the nine-months through September since we
went public. Net interest income grew 16% over the prior year
quarter and grew 4% from the second quarter.
With over $200 million of consumer loans
originated during the quarter, we continued to increase market
share while taking pro-active steps to increase credit standards,
increase pricing, and moderate growth to a level sustainable with
our long-term strategy. Cash collections related to our taxi
medallion assets were $5.7 million, adding $0.10 to our bottom
line. In October, we collected an additional $9.4 million from one
of larger taxi medallion borrowers, which will result in a pre-tax
gain of $8.0 million in the fourth quarter.
Our board of directors has authorized a 25%
increase of our quarterly dividend to $0.10 per share beginning
with the upcoming dividend payment next month, another sign of our
commitment to providing sustainable shareholder value over the
long-term.”
Business Segment Highlights
Recreation Lending Segment
- Originations were $92.6 million
during the quarter, compared to $149.2 million a year ago.
- Recreation loans grew 15% to $1.3
billion as of September 30, 2023, compared to $1.2 billion a
year ago.
- Recreation loans were 61% of total
loans as of September 30, 2023, compared to 63% a year
ago.
- Net interest income grew 13% to
$35.6 million for the quarter, from $31.5 million in in the prior
year quarter.
- The average interest rate was
14.73% at quarter-end, compared to 14.21% a year ago.
- Recreation loans 90 days or more
past due were $5.9 million, or 0.45% of gross recreation loans, as
of September 30, 2023, compared to $5.1 million, or 0.45%, a
year ago.
Home Improvement Lending Segment
- Originations were $79.3 million
during the quarter, compared to $100.5 million a year ago.
- Home improvement loans grew 30% to
$750.5 million as of September 30, 2023, compared to $575.2
million a year ago.
- Home improvement loans were 34% of
total loans as of September 30, 2023, compared to 31% a year
ago.
- Net interest income grew 19% to
$11.4 million for the quarter, from $9.6 million in the prior year
quarter.
- The average interest rate was 9.38%
at quarter-end, compared to 8.55% a year ago.
- Home improvement loans 90 days or
more past due were $1.0 million, or 0.13% of gross home improvement
loans, as of September 30, 2023, compared to $0.5 million, or
0.09%, a year ago.
Commercial Lending Segment
- Commercial loans were $100.3
million at September 30, 2023, compared to $93.7 million a
year ago.
- The average interest rate on the
portfolio was 12.91%, compared to 12.26% a year ago.
Medallion Lending Segment
- The Company collected $5.7 million
of cash on taxi medallion-related assets during the quarter.
- Total net taxi medallion assets
declined to $16.2 million (comprised of $2.2 million of loans net
of allowance for credit losses and $14.0 million of loan collateral
in process of foreclosure), a 41% reduction from a year ago, and
represented less than 1% of the Company’s total assets, as of
September 30, 2023.
Capital Allocation
Quarterly Dividend
- The Board of Directors increased
the quarterly dividend to $0.10 per share, payable on November 30,
2023 to shareholders of record at the close of business on November
15, 2023.
Conference Call Information
The Company will host a conference call to
discuss its third quarter financial results tomorrow, Tuesday,
October 31, 2023, at 9:00 a.m. Eastern time.
In connection with its earnings release, the
Company has updated its quarterly supplement presentation, which is
now available at www.medallion.com.
How to Participate
- Date: Tuesday,
October 31, 2023
- Time: 9:00 a.m.
Eastern time
- U.S. dial-in
number: (877) 407-0789
- International dial-in
number: (201) 689-8562
- Live webcast: Link
to Webcast of 3Q23 Earnings Call
A link to the live audio webcast of the
conference call will also be available at the Company’s IR
website.
Replay Information
The webcast replay will be available at the
Company's IR website until the next quarter’s results are
announced.
The conference call replay will be available
following the end of the call through Tuesday, November 7.
- U.S. dial-in
number: (844) 512-2921
- International dial-in
number: (412) 317-6671
- Passcode: 1374
1580
About Medallion Financial
Corp.
Medallion Financial Corp. (NASDAQ:MFIN) and its
subsidiaries originate and service a growing portfolio of consumer
loans and mezzanine loans in various industries. Key industries
served include recreation (towable RVs and marine) and home
improvement (replacement roofs, swimming pools, and windows).
Medallion Financial Corp. is headquartered in New York City, NY,
and its largest subsidiary, Medallion Bank, is headquartered in
Salt Lake City, Utah. For more information, please visit
www.medallion.com.
Forward-Looking Statements
Please note that this press release contains
forward-looking statements that involve risks and uncertainties
relating to business performance, cash flow, net interest income
and expenses, other expenses, earnings, growth, and our growth
strategy. These statements are often, but not always, made using
words or phrases such as “will” and “continue” or the negative
version of those words or other comparable words or phrases of a
future or forward-looking nature. These statements relate to future
public announcements of our earnings, the impact of the pending SEC
litigation, expectations regarding our loan portfolio, including
collections on our medallion loans, the potential for future asset
growth, and market share opportunities. Medallion’s actual results
may differ significantly from the results discussed in such
forward-looking statements. For example, statements about the
effects of the current economy, whether inflation or the risk of
recession, operations, financial performance and prospects
constitute forward-looking statements and are subject to the risk
that the actual impacts may differ, possibly materially, from what
is reflected in those forward-looking statements due to factors and
future developments that are uncertain, unpredictable and in many
cases beyond Medallion’s control. In addition to risks relating to
the current economy, a description of certain risks to which
Medallion is or may be subject, including risks related to the
pending SEC litigation, please refer to the factors discussed under
the heading “Risk Factors” in Medallion’s 2022 Annual Report on
Form 10-K.
Company Contact:Investor
Relations212-328-2176InvestorRelations@medallion.com
MEDALLION FINANCIAL CORP.CONSOLIDATED BALANCE
SHEETS(UNAUDITED) |
(Dollars in thousands, except share and per share data) |
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
September 30, 2022 |
|
Assets |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and federal funds sold |
|
$ |
127,642 |
|
|
$ |
105,598 |
|
|
$ |
98,202 |
|
Investment and equity securities |
|
|
63,717 |
|
|
|
58,785 |
|
|
|
59,024 |
|
Loans |
|
|
2,203,038 |
|
|
|
1,916,953 |
|
|
|
1,855,510 |
|
Allowance for credit losses |
|
|
(79,133 |
) |
|
|
(63,845 |
) |
|
|
(61,535 |
) |
Net loans receivable |
|
|
2,123,905 |
|
|
|
1,853,108 |
|
|
|
1,793,975 |
|
Goodwill and intangible assets, net |
|
|
171,755 |
|
|
|
172,838 |
|
|
|
173,200 |
|
Loan collateral in process of foreclosure |
|
|
15,923 |
|
|
|
21,819 |
|
|
|
24,331 |
|
Other assets |
|
|
55,685 |
|
|
|
47,731 |
|
|
|
50,809 |
|
Total
assets |
|
$ |
2,558,627 |
|
|
$ |
2,259,879 |
|
|
$ |
2,199,541 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
1,855,096 |
|
|
$ |
1,607,110 |
|
|
$ |
1,555,832 |
|
Long-term debt |
|
|
218,137 |
|
|
|
214,320 |
|
|
|
219,448 |
|
Short-term borrowings |
|
|
18,489 |
|
|
|
5,000 |
|
|
|
— |
|
Deferred tax liabilities, net |
|
|
23,131 |
|
|
|
26,753 |
|
|
|
26,132 |
|
Operating lease liabilities |
|
|
7,075 |
|
|
|
8,408 |
|
|
|
8,580 |
|
Accounts payable and accrued expenses |
|
|
39,437 |
|
|
|
27,764 |
|
|
|
29,660 |
|
Total
liabilities |
|
|
2,161,365 |
|
|
|
1,889,355 |
|
|
|
1,839,652 |
|
Total stockholders’
equity |
|
|
328,474 |
|
|
|
301,736 |
|
|
|
291,101 |
|
Non-controlling interest in
consolidated subsidiaries |
|
|
68,788 |
|
|
|
68,788 |
|
|
|
68,788 |
|
Total
equity |
|
|
397,262 |
|
|
|
370,524 |
|
|
|
359,889 |
|
Total liabilities and
equity |
|
$ |
2,558,627 |
|
|
$ |
2,259,879 |
|
|
$ |
2,199,541 |
|
Number of shares
outstanding |
|
|
23,363,731 |
|
|
|
23,061,673 |
|
|
|
23,185,070 |
|
Book value per
share |
|
$ |
14.06 |
|
|
$ |
13.08 |
|
|
$ |
12.56 |
|
MEDALLION FINANCIAL CORP.CONSOLIDATED STATEMENTS
OF OPERATIONS(UNAUDITED) |
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(Dollars in thousands, except share and per share data) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Total interest income |
|
$ |
65,886 |
|
|
$ |
51,694 |
|
|
$ |
183,455 |
|
|
$ |
142,108 |
|
Total interest
expense |
|
|
17,102 |
|
|
|
9,654 |
|
|
|
44,379 |
|
|
|
25,258 |
|
Net interest
income |
|
|
48,784 |
|
|
|
42,040 |
|
|
|
139,076 |
|
|
|
116,850 |
|
Provision for credit losses |
|
|
14,532 |
|
|
|
10,047 |
|
|
|
27,045 |
|
|
|
21,046 |
|
Net interest income
after provision for credit losses |
|
|
34,252 |
|
|
|
31,993 |
|
|
|
112,031 |
|
|
|
95,804 |
|
Other income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of loans and medallion |
|
|
1,417 |
|
|
|
518 |
|
|
|
4,578 |
|
|
|
5,061 |
|
Gain (loss) on equity investments |
|
|
2,180 |
|
|
|
(1,123 |
) |
|
|
2,189 |
|
|
|
2,985 |
|
Write-down of loan collateral in process of foreclosure |
|
|
(30 |
) |
|
|
(94 |
) |
|
|
(303 |
) |
|
|
(608 |
) |
Other income, net |
|
|
739 |
|
|
|
468 |
|
|
|
1,868 |
|
|
|
1,217 |
|
Total other income
(loss), net |
|
|
4,306 |
|
|
|
(231 |
) |
|
|
8,332 |
|
|
|
8,655 |
|
Other
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
9,630 |
|
|
|
8,411 |
|
|
|
27,805 |
|
|
|
23,709 |
|
Loan servicing fees |
|
|
2,501 |
|
|
|
2,159 |
|
|
|
7,084 |
|
|
|
6,231 |
|
Collection costs |
|
|
1,583 |
|
|
|
1,593 |
|
|
|
4,729 |
|
|
|
3,935 |
|
Professional fees |
|
|
1,148 |
|
|
|
3,722 |
|
|
|
4,223 |
|
|
|
12,106 |
|
Other expenses |
|
|
4,227 |
|
|
|
3,524 |
|
|
|
12,643 |
|
|
|
10,274 |
|
Total other
expenses |
|
|
19,089 |
|
|
|
19,409 |
|
|
|
56,484 |
|
|
|
56,255 |
|
Income before income
taxes |
|
|
19,469 |
|
|
|
12,353 |
|
|
|
63,879 |
|
|
|
48,204 |
|
Income tax provision |
|
|
6,727 |
|
|
|
3,205 |
|
|
|
18,582 |
|
|
|
12,892 |
|
Net income after
taxes |
|
|
12,742 |
|
|
|
9,148 |
|
|
|
45,297 |
|
|
|
35,312 |
|
Less: income attributable to the non-controlling interest |
|
|
1,512 |
|
|
|
1,512 |
|
|
|
4,536 |
|
|
|
4,535 |
|
Total net income
attributable to Medallion Financial Corp. |
|
$ |
11,230 |
|
|
$ |
7,636 |
|
|
$ |
40,761 |
|
|
$ |
30,777 |
|
Basic net income per share |
|
$ |
0.50 |
|
|
$ |
0.33 |
|
|
$ |
1.81 |
|
|
$ |
1.28 |
|
Diluted net income per share |
|
$ |
0.48 |
|
|
$ |
0.32 |
|
|
$ |
1.77 |
|
|
$ |
1.26 |
|
Weighted average
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,596,982 |
|
|
|
23,154,775 |
|
|
|
22,469,968 |
|
|
|
24,020,058 |
|
Diluted |
|
|
23,392,901 |
|
|
|
23,510,645 |
|
|
|
23,067,944 |
|
|
|
24,332,776 |
|
Dividends declared per common share |
|
$ |
0.08 |
|
|
$ |
0.08 |
|
|
$ |
0.24 |
|
|
$ |
0.24 |
|
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