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Medallion Bank Reports 2022 Fourth Quarter and Full-Year Results and Declares Series F Preferred Stock Dividend

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Medallion Bank (Nasdaq: MFIN) reported strong financial results for Q4 and the year ending December 31, 2022, showing net income of $19.7 million for Q4 and a record annual net income of $74.6 million. The bank’s total loan portfolio increased by 28.8% to $1.8 billion, with significant growth in the home improvement and recreation lending segments. However, provisions for loan losses rose to $8.4 million in Q4, up from $1.6 million a year prior. The bank will pay a dividend of $0.50 on its Series F Preferred Stock on April 3, 2023. The adoption of the CECL accounting standard on January 1, 2023, may lead to larger loan loss provisions going forward.

Positive
  • Record annual net income of $74.6 million, up from $70.0 million in 2021.
  • Total loan portfolio grew by 28.8% to $1.8 billion.
  • Net interest income for the year increased to $164.6 million.
Negative
  • Provisions for loan losses increased to $24.7 million in 2022 from $3.7 million in 2021.
  • Annualized net charge-offs rose to 1.0% of average loans outstanding, up from 1.2% in 2021.
  • The adoption of CECL may lead to larger loan loss provisions in the near term.

SALT LAKE CITY, Jan. 30, 2023 (GLOBE NEWSWIRE) -- Medallion Bank (Nasdaq: MBNKP, the “Bank”), an FDIC-insured bank providing consumer loans for the purchase of recreational vehicles, boats, and home improvements, along with loan origination services to fintech strategic partners, announced today its results for the quarter and year ended December 31, 2022. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

2022 Fourth Quarter Highlights

  • Net income of $19.7 million, compared to net income of $19.0 million in the prior year quarter.
  • Net interest income of $44.4 million with a net interest margin of 9.2%, compared to $37.3 million and 9.9% in the prior year quarter.
  • Provision for loan losses was $8.4 million, compared to $1.6 million in the prior year quarter.
  • Annualized net charge-offs were 1.7% of average loans outstanding, compared to 0.3% in the prior year quarter.

2022 Full-Year Highlights

  • Record net income of $74.6 million, compared to net income of $70.0 million in 2021.
  • Net interest income of $164.6 million with a net interest margin of 9.4%, compared to $136.8 million and 10.0% in 2021.
  • ROA and ROE were 4.2% and 26.5%, respectively, for the year ended December 31, 2022, compared to 5.0% and 29.1% for the prior year.
  • Provision for loan losses was $24.7 million, compared to $3.7 million in 2021.
  • Net charge-offs were 1.0% of average loans outstanding, compared to 1.2% in 2021.
  • The total loan portfolio grew 28.8% to $1.8 billion during the year.
  • Total assets were $2.0 billion, total capital was $306.7 million, and the Tier 1 leverage ratio was 16.2% at December 31, 2022.

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “We had another tremendous year. We closed out 2022 with record annual net income driven by growth in our recreation and home improvement lending segments. In the fourth quarter, net income was a record high even with recreation loan demand and loan loss provisions continuing to move toward historical levels. We believe our culture, our team, and our superior customer service model have positioned us well for the coming year.”

Recreation Lending Segment

  • The Bank’s recreation loan portfolio grew 22.6% to $1.2 billion as of December 31, 2022, compared to $965.3 million at December 31, 2021.
  • Net interest income was $33.4 million, compared to $28.7 million in the prior year quarter.
  • Recreation loans were 64.9% of loans receivable as of December 31, 2022, compared to 68.2% at December 31, 2021.
  • The quarterly provision for recreation loan losses was $7.3 million, compared to $2.1 million in the prior year quarter.
  • Annualized net charge-offs were 2.4% of average recreation loans outstanding, compared to 1.0% in the prior year quarter.

Home Improvement Lending Segment

  • The Bank’s home improvement loan portfolio grew 43.4% to $626.4 million as of December 31, 2022, compared to $436.9 million at December 31, 2021.
  • Net interest income was $10.5 million, compared to $8.5 million in the prior year quarter.
  • Home improvement loans were 34.4% of loans receivable as of December 31, 2022, compared to 30.9% at December 31, 2021.
  • The provision for home improvement loan losses was $2.7 million, compared to $1.2 million in the prior year quarter.
  • Annualized net charge-offs were 1.1% of average home improvement loans outstanding, compared to annualized net charge-offs of 0.4% in the prior year quarter.

Current Expected Credit Loss Adoption on January 1

On January 1, 2023, we formally adopted the Current Expected Credit Loss accounting standard (Topic 326), otherwise known as CECL. Our preliminary calculation of the CECL transition amount on that date was a $11.6 million increase in our allowance for loan losses, or allowance for credit losses as it is called under CECL. This was an increase in the combined recreation and home improvement loan allowance of approximately 22%, and was recorded in retained earnings with no impact on net income. The medallion loan allowance was not affected. With the adoption of CECL, we expect that there will be earlier recognition of credit losses, including a near-term effect of larger loan loss provisions compared to the incurred losses accounting standard.

Series F Preferred Stock Dividend

On January 26, 2023, the Bank’s Board of Directors declared a quarterly cash dividend of $0.50 per share on the Bank’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, which trades on the Nasdaq Capital Market under the ticker symbol “MBNKP.” The dividend is payable on April 3, 2023, to holders of record at the close of business on March 15, 2023.

About Medallion Bank

Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats, and home improvements, along with loan origination services to fintech strategic partners. The Bank works directly with thousands of dealers, contractors and financial service providers serving their customers throughout the United States. Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City and is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

For more information, visit www.medallionbank.com

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, returns and growth. These statements are often, but not always, made through the use of words or phrases such as “will” or “expect,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature, such as “continuing.” These statements relate to our future earnings, returns, capital levels, growth prospects, asset quality and pursuit and execution of our strategy. Medallion Bank’s actual results may differ significantly from the results discussed in such forward-looking statements. For a description of certain risks to which Medallion Bank is or may be subject, please refer to the factors discussed under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in Medallion Bank’s Form 10-K for the year ended December 31, 2021, and in its Quarterly Reports on Form 10-Q, filed with the FDIC. Medallion Bank’s Form 10-K, Form 10-Qs and other FDIC filings are available in the Investor Relations section of Medallion Bank’s website. In addition, Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period.  

Statements about Medallion Bank's preliminary calculations relating to the impact of adopting CECL consist of preliminary estimates. These estimates are forward-looking statements and are subject to change, possibly materially, as Medallion Bank completes its financial statements for the first quarter of 2023.

Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com

MEDALLION BANK
STATEMENTS OF OPERATIONS
(UNAUDITED)
 For the Three Months Ended December 31, For the Years Ended December 31,
(In thousands)2022
 2021
 2022
 2021
Total interest income$51,774  $41,436  $187,272  $154,310 
Total interest expense 7,361   4,178   22,667   17,544 
Net interest income 44,413   37,258   164,605   136,766 
        
Provision for loan losses 8,409   1,578   24,709   3,746 
Net interest income after provision for loan losses 36,004   35,680   139,896   133,020 
        
Other income (loss)       
Write-downs of loan collateral in process of foreclosure and other assets (49)  (140)  (582)  (2,990)
Other non-interest income 280   386   1,237   1,144 
Total other income (loss) 231   246   655   (1,846)
        
Non-interest expense       
Salaries and benefits 4,430   3,838   15,086   12,237 
Loan servicing 2,571   2,756   10,843   10,692 
Collection costs 1,445   1,305   5,385   4,775 
Regulatory fees 797   489   2,418   1,872 
Professional fees 446   366   1,754   1,695 
Occupancy and equipment 209   217   793   789 
Other 1,154   872   4,248   3,552 
Total non-interest expense 11,052   9,843   40,527   35,612 
        
Income before income taxes 25,183   26,083   100,024   95,562 
Provision for income taxes 5,460   7,071   25,386   25,563 
        
Net income$19,723  $19,012  $74,638  $69,999 

MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)

(In thousands)December 31, 2022 December 31, 2021
Assets   
Cash and federal funds sold$74,078  $61,402 
Investment securities, available-for-sale 48,492   44,772 
    
Loans, inclusive of net deferred loan acquisition costs 1,822,737   1,415,415 
Allowance for loan losses (61,630)  (53,384)
Loans, net 1,761,107   1,362,031 
    
Loan collateral in process of foreclosure 10,381   21,438 
Fixed assets and right-of-use lease assets, net 6,600   4,230 
Deferred tax assets 9,241   7,576 
Accrued interest receivable and other assets 40,928   37,786 
Total assets$1,950,827  $1,539,235 
Liabilities and Shareholders’ Equity   
Liabilities   
Deposits and other funds borrowed$1,607,110  $1,250,880 
Accrued interest payable 2,422   1,228 
Income tax payable 23,165   16,104 
Other liabilities 10,613   7,670 
Due to affiliates 862   906 
Total liabilities 1,644,172   1,276,788 
    
Total shareholders’ equity 306,655   262,447 
Total liabilities and shareholders’ equity$1,950,827  $1,539,235 

FAQ

What were the net income results for Medallion Bank (MFIN) in Q4 2022?

Medallion Bank reported a net income of $19.7 million for Q4 2022.

What is the dividend amount declared by Medallion Bank (MFIN) for Series F Preferred Stock?

The Bank declared a quarterly dividend of $0.50 per share on the Series F Preferred Stock.

When will the dividend for Medallion Bank's Series F Preferred Stock be paid?

The dividend will be paid on April 3, 2023.

How did the total loan portfolio of Medallion Bank (MFIN) change in 2022?

The total loan portfolio increased by 28.8% to $1.8 billion during 2022.

Medallion Financial Corp

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