Consolidated Results of Operations
2019 First Quarter under Bank Holding Company Accounting
Net income attributable to shareholders was $1,228,000, or $0.05 per diluted share for the three months ended March 31, 2019.
Total interest income was $30,043,000 for the three months primarily reflective of activity on the consumer and commercial loans, which had
slightly declined from the three months ended December 31, 2018 due to exits in the commercial loans and lower earnings on recreation loans. The yield on interest earning assets was 11.52%. Average interest earning assets were $1,057,488,000
for the three months.
Loans before allowance for loan losses were $1,024,200,000 as of March 31, 2019, and were comprised of
recreation ($609,999,000), home improvement ($193,275,000), medallion ($165,715,000), and commercial ($55,211,000) loans. The Company had an allowance for loan losses as of March 31, 2019 of $36,862,000, which was attributable to the medallion
(69%), recreation (24%), home improvement (6%), and commercial (1%) loan portfolios. The provision for loan loss remained relatively in line with provision as of December 31, 2018 even as total gross loans had increased, mainly due to consumer
loan originations. The provision for loan loss was $13,343,000, reflecting an increase of reserves on the consumer loan portfolio and to a lesser extent an increase in reserves on the medallion portfolio due to a decline in the medallion values. See
Note 4 for additional information on loans and allowance for loan losses.
Interest expense was $7,722,000 for the 2019 first quarter and
the cost of borrowed funds was 2.93%. Interest expense declined from $8,004,000 for the three months ended December 31, 2018 mainly due to lower borrowings as the DZ loan had been settled during the fourth quarter of 2018. Average debt
outstanding was $1,067,075,000. See page 43 for a table which shows average balances and cost of funds for our funding sources.
Net
interest income was $22,321,000 and the net interest margin was 8.56% for the 2019 first quarter for the reasons stated above.
Noninterest income was $6,863,000 for the 2019 first quarter, which included a $4,145,000 gain on the extinguishment of debt, $3,179,000 of
race team related revenues, as well as gains on equity investments and value adjustments on the Chicago owned medallions, which were partly offset by the decline in collateral value on the loans in process of foreclosure of $2,119,000 mainly due to
the change in the New York market.
Operating expenses were $14,702,000 for the three months compared to $25,691,000 for the three months
ended December 31, 2018. For the current three months, salaries and benefits were $5,341,000, race team costs were $1,998,000, professional fees were $1,636,000, loan servicing costs were $1,194,000, primarily related to the recreation and home
improvement consumer loans, and occupancy and other operating expenses were $4,533,000. For the three months ended December 31, 2018, the majority of the change was due the $5,615,000 impairment recorded as well as higher collection costs
incurred mainly related to medallion loans.
Total income tax benefit was $256,000 for the three months. See Note 9 for more information.
Loan collateral in process of foreclosure was $49,808,000 at March 31, 2019, an increase from $49,495,000 at December 31, 2018.
The increase was primarily reflective of additional loans having reached 120 days past due being charged-down to their collateral value and reclassified to loans in process of foreclosure, partially offset by the decline in collateral values and to
a lesser extent the disposition of collateral assets.
Goodwill and intangible assets were $204,423,000 at March 31, 2019, compared
to $204,785,00 as of December 31, 2018. See Note 2 for further information regarding goodwill and intangible assets.
2018 First Quarter under
Investment Company Accounting
Net decrease in net assets resulting from operations was $14,874,000 or ($0.62) per diluted common share
in the 2018 first quarter primarily reflecting an increase in net realized/unrealized losses on the investment portfolio, increased operating expenses and higher income taxes. Net investment loss after income taxes was $3,230,000 or ($0.13) per
share in the 2018 quarter.
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