Medallion Financial Corp. (Nasdaq: MFIN), a finance company that
originates and services loans in various consumer and commercial
niche industries, announced today its 2018 third quarter results.
Effective April 2, 2018, Medallion Financial Corp. withdrew its BDC
election, and now operates as a finance company following the
reporting conventions of bank holding companies, which began with
the 2018 second quarter. A major component of this change is that
we now consolidate wholly-owned or controlled subsidiaries,
particularly Medallion Bank, which were previously treated as
unconsolidated portfolio investment companies.
2018 Third Quarter Highlights
- Total assets reached $1.57 billion as
of September 30, 2018
- Net interest income before the
provision for loan losses was $24.3 million, reflecting primarily
the contributions of the consumer lending segments
- Net interest margin was 7.94% in the
2018 third quarter, compared to 7.47% in the prior year period on a
combined basis with Medallion Bank, and one of the largest in the
Company’s history
- Net income from Medallion’s consumer
and commercial segments totaled $13.2 million in the quarter,
compared to $8.9 million from the prior quarter, a 48%
increase
- Net loss was $4.7 million, or $0.19 per
share, compared to a net loss of $14.6 million, or $0.60 per share,
in the second quarter
- Provision for medallion loan losses was
$13.3 million for the 2018 third quarter, down significantly from
$24.8 million in the second quarter, and $62.7 million in the first
quarter, recorded as non-cash valuation adjustments and realized
losses/charge-offs when combined with Medallion Bank
- Medallion Bank earned $10.7 million in
the quarter, the highest in the Bank’s history
- 90 day plus medallion loan
delinquencies were $10.3 million or 4.1% of gross medallion loans,
down from $118.1 million or 22.8% in the 2017 third quarter
- Medallion Bank sold $100.9 million of
performing consumer loans for cash proceeds of $106.5 million, a
gain on sale of $2.9 million was recorded and $2.3 million of the
allowance for loan losses on the sold loans was reversed
- Medallion Bank’s Tier 1 capital to
average assets leverage ratio at quarter-end improved to
15.08%
- In November, the Company successfully
restructured the trust facility which will result in a projected
gain to earnings and tangible book value in excess of $20 million
in the fourth quarter.
Andrew Murstein, President of Medallion stated, “We are very
pleased with our quarter, the direction of the Company, and the
successful restructuring of the trust facility. As we have been
indicating, our focus is to continue to reduce our medallion
exposure, continue to grow our consumer and commercial segments,
and to restructure the trust facility. We have accomplished all
three. Medallion losses have been steadily declining this year, and
exposure is now the lowest it has been since 2003. The Bank had its
most profitable quarter ever, and by restructuring the trust
facility, we will recapture over $20 million of earnings and
tangible book value in the fourth quarter, as well as being able to
remove over $90 million of liabilities and $60 million of
medallion-related assets from our balance sheet.”
Mr. Murstein continued: “Medallion Bank continues to build
tremendous value for the Company. As the Bank continues to grow and
reduce its medallion exposure, we continue to build and increase
shareholder value. The Company recorded another solid quarter of
$24.3 million of net interest income supported by an exemplary net
interest margin of 7.94%. We believe our net interest margin will
continue to stand out as Medallion Bank focuses its efforts on
underwriting higher yielding, performing consumer loans, while
decreasing its lower yielding medallion loan exposure. During the
quarter we sold $100.9 million of performing loans at a gain. This
is the Bank’s fourth loan sale, and demonstrates not only the
strength of the overall underwriting of the consumer loan
portfolio, but the ability to provide an alternative source of
liquidity for the Company.”
“On the medallion side, our total medallion loan exposure is at
the lowest level since 2003, while our delinquency rate as a
percentage of the portfolio continues to decrease. We reiterate
that we remain hopeful that prices have reached a floor, as we
valued our nonperforming New York City medallion collateral at
$181,000, and wheelchair accessible medallion collateral at
$154,000, exactly the same values we reported last quarter, and in
line with the values in the 2018 first quarter. In addition, there
were numerous legislative proposals and regulations proposed by the
TLC in the third quarter as they continue to take action to level
the playing field between taxis and ride-hailing services, and
enhance value to medallion owners.”
Consumer Lending Segments
Medallion’s net consumer lending portfolio was $741.8 million as
of September 30, 2018, a 6% decrease compared to $790.7 million at
the end of the prior quarter, due to the September loan sale. Net
interest income for the third quarter was $25.0 million. Including
the loans sold in 2016, 2017, and 2018, the consumer segments
continue to grow in excess of 30% per year. The average interest
rate on the portfolio was 15.18%, up slightly from the 2018 second
quarter. Consumer loan delinquencies over 90 days past due as of
September 30, 2018 were 0.45% versus 0.32% in the prior
quarter.
Medallion Lending Segment
The Company’s net medallion lending portfolio as of September
30, 2018 was $235.8 million, compared to $430.1 million at
September 30, 2017 on a combined basis with Medallion Bank, a 45%
decrease. The average interest rate on the medallion portfolio was
4.35% versus 4.38% a year ago on a combined basis with Medallion
Bank. Total medallion delinquencies over 90 days were $10.3 million
as of September 30, 2018, compared to $12.4 million in the
preceding quarter, and $118.1 from the prior year. Medallion
provision for loan losses was $13.3 million in the quarter, down
from $24.8 million in the prior quarter and $62.7 million when
combined with the Bank in the 2018 first quarter.
Larry Hall, Chief Financial Officer, stated, “As commented last
quarter, we have been in discussions with the lender to the trust
to make certain structural changes to that facility, which were
consummated in November 2018. As a result, in the 2018 fourth
quarter we will be able to deconsolidate the trust that owns
various medallion loans from our overall results, which will
eliminate more than $63.2 million of medallion loans and loans in
process of foreclosure from our balance sheet, along with $98.5
million of debt and payables the trust owes to its lender, and
allow for the recapture of over $20 million in reserves associated
with medallion loans that the Company is not liable for, net of the
related tax and other liabilities. To facilitate this result, the
Company settled its limited recourse guaranty of the trust to its
lender for a $1.4 million note, payable in installments over the
next five years. During the 2018 third quarter, the Company
incurred losses in the trust of $6.6 million after taxes. Losses
like that will no longer run through our financial statements since
we will no longer have to consolidate the trust’s losses. The
Company will also remain as the servicer of the loans in the trust
and receive a payment for doing so.”
Commercial Lending Segment
The Company’s net commercial lending portfolio as of September
30, 2018 was $82.3 million. The average interest rate on the
portfolio was 13.9% compared to 12.7% a year ago. Net interest
income for the third quarter was $2.0 million. The segment’s
pipeline remains strong and the Company expects continued growth in
its loan portfolio for the rest of the year.
Conference Call Information
The Company will be hosting a conference call to discuss the
third quarter financial results on November 13th, at 9:00 a.m.
Eastern time.
The dial-in number for the conference call is (877) 407-0789
(toll-free) or (201) 689-8562 (direct). Please dial the number 10
minutes prior to the scheduled start time. A live webcast of the
conference call will also be available on Medallion Financial’s
website at http://www.medallion.com/investors.html.
A replay will be available following the end of the call through
Tuesday, November 20, 2018, by telephone at (844) 512-2921
(toll-free) or (412) 317-6671 (direct), passcode 13685012. A
webcast replay of the call will be available at
http://www.medallion.com/investors.html until the next quarter is
announced.
* * *
About Medallion Financial Corp.
Medallion Financial Corp. is a finance company that originates
and services loans in various industries, and its wholly-owned
subsidiary, Medallion Bank, also originates and services consumer
loans. Medallion Financial Corp. has lent more than $8 billion
since its initial public offering in 1996.
Please note that this press release contains forward-looking
statements that involve risks and uncertainties relating to
business performance, cash flow, costs, sales, net investment
income, earnings, and growth. Medallion’s actual results may differ
significantly from the results discussed in such forward-looking
statements. Factors that might cause such a difference include, but
are not limited to, those factors discussed under the heading “Risk
Factors,” in Medallion’s 2017 Annual Report on Form 10-K.
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENT OF
OPERATIONS
(UNAUDITED)
Bank Holding Company Accounting
(Dollars in thousands, except per share data)
For
the Three Months Ended September 30, 2018 Interest and fees on
loans
$ 32,692 Medallion lease income
30
Interest and dividends on investment securities
430 Total interest income
33,152 Interest on deposits
5,064 Interest on short-term borrowings
1,698
Interest on long-term debt
2,125
Total interest expense 8,887
Net interest income 24,265 Provision
for loan losses
18,205 Net
interest loss after provision for loan losses
6,060 Other income (loss)
Sponsorship and race winnings
5,371 Gain on sale of loans
5,488 Impairment of equity investments
(388 )
Write-down of loan collateral in process of foreclosure
(1,265 ) Other income
235
Total other income 9,441
Other expenses Salaries and employee benefits
5,999 Race team related expenses
2,876 Professional
fees
3,951 Loan servicing fees
1,185 Collection costs
1,381 Travel, meals and entertainment
313 Rent
expense
615 Regulatory fees
563 Amortization of
intangible assets
361 Other expenses
2,220 Total other expenses
19,464 Loss before income taxes
(3,963 ) Income tax benefit
117 Net loss after taxes
(3,846 ) Less: income attributable to the
noncontrolling interest
851
Total net income (loss) attributable to Medallion Financial
Corp. $ (4,697
) Basic and diluted net loss per share
$ (0.19
) Weighted average common shares
outstanding Basic and diluted
24,235,242
MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Bank Holding Company Accounting
(Dollars in thousands, except share and per share
data)
September 30, 2018 Assets Cash
$
10,678 Federal funds sold
132,882 Equity investments
10,752 Investment securities
45,757 Loans
1,089,545 Allowance for losses
(29,484 ) Net loans
receivable
1,060,061
Accrued interest receivable
7,005 Property and
equipment, net
1,093 Loan collateral in process of
foreclosure
59,761 Goodwill and intangible assets
210,761 Deferred tax assets and other tax receivables, net
- Other assets
32,657
Total assets $
1,571,407 Liabilities Accounts
payable and accrued expenses
$ 17,789 Accrued
interest payable
6,118 Deposits
946,975 Short-term
borrowings
160,218 Deferred tax liabilities and other tax
payables
2,011 Long-term debt
157,881 Total liabilities
1,290,992 Commitments and
contingencies
— Total
stockholders’ equity 252,920
Non-controlling interest in consolidated subsidiaries
27,495 Total equity
280,415 Total liabilities and
equity $ 1,571,407
Number of shares outstanding
24,440,052 Book value
per share $ 10.35
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181112005723/en/
Company:Medallion Financial
Corp.Alex E. Arzeno, 212-328-2176Investors
RelationsInvestorRelations@medallion.com
Medallion Financial (NASDAQ:MFIN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Medallion Financial (NASDAQ:MFIN)
Historical Stock Chart
From Apr 2023 to Apr 2024