NEW YORK, Oct. 27, 2022 (GLOBE NEWSWIRE) -- Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the “Company”), a 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, 2022.
2022 Third Quarter Highlights
- Net income was $7.6 million, or $0.32 per share, compared to $15.9 million, or $0.64 per share, in the prior year quarter.
- Net interest income grew 23% to $42.0 million from $34.1 million in the prior year quarter.
- Net interest margin was 8.91%, compared to 9.48% in the prior year quarter.
- Loan originations increased 40% to $273.7 million from $195.8 million in the prior year quarter.
- The loan loss provision was $10.0 million, compared to a benefit of $0.3 million in the prior year quarter.
- The Company declared and paid a quarterly cash dividend of $0.08 per share.
- The Company repurchased 1,053,870 shares of its common stock during the quarter for $8.2 million.
Executive Commentary – Andrew Murstein, President of Medallion
“Our financial results for the quarter were again driven by growth in our consumer lending businesses. Our team is navigating the rising interest rate environment well. Overall loan originations remained strong with 40% growth this quarter over last year, resulting in 25% growth in recreation loans and 44% in home improvement loans. Our current quarter results included the impact of $3.2 million of loan loss provisions and equity losses related to our commercial business, and unlike last year did not include any gains from the exits of fintech investments. As we’ve stated in the past, the earnings in our commercial lending segment can fluctuate depending on several factors, including the timing of investment exits, but over the long term this segment has been profitable. We repurchased $8.2 million of our common stock during the quarter and declared and paid an $0.08 per share dividend.”
Business Segment Highlights
Consumer Lending Segments
- Originations grew to $249.6 million during the quarter, or 33% over the $187.1 million of the prior year quarter.
- Consumer loans were $1.7 billion as of September 30, 2022, compared to $1.3 billion a year ago.
- Consumer loans were 94% of total loans as of September 30, 2022, similar to a year ago.
- The loan portfolios grew 25% for recreation and 44% for home improvement from September 30, 2021.
- Net interest income grew 15% to $41.1 million for the quarter, from $35.9 million in the prior year quarter.
- The average interest rate on the portfolio was 12.30% at quarter-end, compared to 12.82% a year ago.
- Consumer loans 90 days or more past due were $5.6 million, or 0.33% of gross consumer loans, as of September 30, 2022, compared to $3.2 million, or 0.25%, a year ago.
Commercial Lending Segment
- The Company originated $4.5 million in loans during the third quarter, compared to $5.7 million in the prior year quarter.
- Commercial loans were $93.7 million at September 30, 2022, compared to $72.1 million a year ago.
- The average interest rate on the portfolio was 12.26%, compared to 12.66% a year ago.
Medallion Lending Segment
- The Company collected $5.0 million in the third quarter.
- Total net medallion exposure declined to $27.6 million (comprised of $4.4 million of loans net of allowance for loan losses and $23.2 million of loan collateral in process of foreclosure), representing less than 2% of the Company’s total assets, as of September 30, 2022.
Loan Detail
- During the quarter, net charge-offs were $7.7 million, compared to a benefit of $0.8 million in the prior year quarter.
- Loans 90 days or more past due were 0.33% of loans at September 30, 2022, compared to 0.29% at September 30, 2021.
Capital Allocation
Quarterly Dividend
- The Board of Directors declared a quarterly cash dividend of $0.08 per share payable on November 30, 2022, to shareholders of record at the close of business on November 15, 2022.
Stock Repurchase Plan
- During the third quarter, the Company repurchased 1,053,870 shares of its common stock at an average cost of $7.81 per share, for a total of $8.2 million.
- At the end of the quarter, the Company has $21.8 million remaining under its $40 million share repurchase program.
Conference Call Information
The Company will host a conference call to discuss its third quarter financial results tomorrow, Friday, October 28, 2022, at 9:00 a.m. Eastern time.
As part of its earnings release, the Company has updated its quarterly supplement presentation, which is now available at www.medallion.com.
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, expectations regarding medallion loan portfolio, 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 COVID-19 pandemic on Medallion’s business, 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, the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Medallion, its customers and third parties. In addition to risks related to the ongoing COVID-19 pandemic, as well as risks relating to the current economy, whether inflation or the risk of recession, for 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 2021 Annual Report on Form 10-K.
Company Contact:
MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (Dollars in thousands, except share and per share data) | September 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||||||||
| Assets | |||||||||||||||||
| Cash, cash equivalents, and federal funds sold | $ | 98,202 | $ | 124,484 | $ | 85,374 | |||||||||||
| Equity investments and investment securities | 59,024 | 54,498 | 57,725 | ||||||||||||||
| Loans | 1,855,510 | 1,488,924 | 1,419,681 | ||||||||||||||
| Allowance for loan losses | (61,535 | ) | (50,166 | ) | (47,448 | ) | |||||||||||
| Net loans receivable | 1,793,975 | 1,438,758 | 1,372,233 | ||||||||||||||
| Loan collateral in process of foreclosure | 24,331 | 37,430 | 42,544 | ||||||||||||||
| Goodwill and intangible assets | 173,200 | 174,283 | 200,810 | ||||||||||||||
| Other assets | 50,809 | 43,604 | 46,548 | ||||||||||||||
| Total assets | $ | 2,199,541 | $ | 1,873,057 | $ | 1,805,234 | |||||||||||
| Liabilities | |||||||||||||||||
| Deposits | $ | 1,555,832 | $ | 1,250,880 | $ | 1,196,508 | |||||||||||
| Long-term debt | 219,448 | 219,973 | 213,858 | ||||||||||||||
| Accounts payable and other liabilities | 29,660 | 19,113 | 26,153 | ||||||||||||||
| Deferred tax liabilities and other tax payables | 26,132 | 18,210 | 12,703 | ||||||||||||||
| Operating lease liabilities | 8,580 | 9,053 | 9,346 | ||||||||||||||
| Short-term borrowings | — | — | 8,054 | ||||||||||||||
| Total liabilities | 1,839,652 | 1,517,229 | 1,466,622 | ||||||||||||||
| Commitments and contingencies | |||||||||||||||||
| Total stockholders’ equity | 291,101 | 287,040 | 267,244 | ||||||||||||||
| Non-controlling interest in consolidated subsidiaries | 68,788 | 68,788 | 71,368 | ||||||||||||||
| Total equity | 359,889 | 355,828 | 338,612 | ||||||||||||||
| Total liabilities and equity | $ | 2,199,541 | $ | 1,873,057 | $ | 1,805,234 | |||||||||||
| Number of shares outstanding | 23,185,070 | 25,173,386 | 25,082,161 | ||||||||||||||
| Book value per share | $ | 12.56 | $ | 11.40 | $ | 10.65 | |||||||||||
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| (Dollars in thousands, except share and per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Total interest income | $ | 51,694 | $ | 41,497 | $ | 142,108 | $ | 115,953 | ||||||||||||||||
| Total interest expense | 9,654 | 7,426 | 25,258 | 23,718 | ||||||||||||||||||||
| Net interest income | 42,040 | 34,071 | 116,850 | 92,235 | ||||||||||||||||||||
| Provision (benefit) for loan losses | 10,047 | (337 | ) | 21,046 | 2,000 | |||||||||||||||||||
| Net interest income after provision for loan losses | 31,993 | 34,408 | 95,804 | 90,235 | ||||||||||||||||||||
| Other income (loss) | ||||||||||||||||||||||||
| Gain (loss) on equity investments | (1,123 | ) | 4,101 | 2,985 | 7,306 | |||||||||||||||||||
| Write-down of loan collateral in process of foreclosure | (94 | ) | (438 | ) | (608 | ) | (5,385 | ) | ||||||||||||||||
| Gain on extinguishment of debt | − | − | − | 4,626 | ||||||||||||||||||||
| Sponsorship and race winnings, net | − | 3,335 | − | 10,153 | ||||||||||||||||||||
| Other income | 986 | 208 | 6,278 | 209 | ||||||||||||||||||||
| Total other income (loss), net | (231 | ) | 7,206 | 8,655 | 16,909 | |||||||||||||||||||
| Other expenses | ||||||||||||||||||||||||
| Salaries and employee benefits | 8,411 | 7,957 | 23,709 | 21,542 | ||||||||||||||||||||
| Professional fees | 3,722 | 1,963 | 12,106 | 4,694 | ||||||||||||||||||||
| Loan servicing fees | 2,159 | 1,684 | 6,231 | 5,062 | ||||||||||||||||||||
| Collection costs | 1,593 | 1,136 | 3,935 | 4,010 | ||||||||||||||||||||
| Race team related expenses | − | 2,424 | − | 7,219 | ||||||||||||||||||||
| Other expenses | 3,524 | 3,559 | 10,274 | 10,658 | ||||||||||||||||||||
| Total other expenses | 19,409 | 18,723 | 56,255 | 53,185 | ||||||||||||||||||||
| Income before income taxes | 12,353 | 22,891 | 48,204 | 53,959 | ||||||||||||||||||||
| Income tax provision | 3,205 | 6,167 | 12,892 | 16,573 | ||||||||||||||||||||
| Net income after taxes | 9,148 | 16,724 | 35,312 | 37,386 | ||||||||||||||||||||
| Less: income attributable to the non-controlling interest | 1,512 | 784 | 4,535 | 2,748 | ||||||||||||||||||||
| Total net income attributable to Medallion Financial Corp. | $ | 7,636 | $ | 15,940 | $ | 30,777 | $ | 34,638 | ||||||||||||||||
| Income per common share: | ||||||||||||||||||||||||
| Basic | $ | 0.33 | $ | 0.65 | $ | 1.28 | $ | 1.41 | ||||||||||||||||
| Diluted | $ | 0.32 | $ | 0.64 | $ | 1.26 | $ | 1.39 | ||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||
| Basic | 23,154,775 | 24,634,845 | 24,020,058 | 24,583,573 | ||||||||||||||||||||
| Diluted | 23,510,645 | 24,990,226 | 24,332,776 | 24,945,707 | ||||||||||||||||||||
| Dividends declared | $ | 0.08 | $ | 0.00 | $ | 0.24 | $ | 0.00 | ||||||||||||||||
