Medallion Bank Reports 2024 Third Quarter Results and Declares Series F Preferred Stock Dividend

Rhea-AI Summary

Medallion Bank reported Q3 2024 results with net income of $15.5 million, down from $17.2 million year-over-year. Net interest income increased to $53.2 million from $48.7 million. The total loan portfolio grew 13% to $2.4 billion, with recreation lending up 15% to $1.555 billion and home improvement lending up 8% to $814.1 million. The Bank's provision for credit losses increased to $20.2 million from $14.0 million year-over-year, while maintaining a strong Tier 1 leverage ratio of 15.66%. The Board declared a quarterly dividend of $0.50 per share on Series F Preferred Stock.

Positive

• Net interest income increased 9.2% YoY to $53.2 million
• Total loan portfolio grew 13% YoY to $2.4 billion
• Recreation loan originations increased 50% YoY to $139.1 million
• Strong Tier 1 leverage ratio of 15.66%

Negative

• Net income decreased 9.9% YoY to $15.5 million
• Net interest margin declined to 8.44% from 8.70% YoY
• Provision for credit losses increased 44.3% YoY to $20.2 million
• Recreation loan delinquencies increased to 4.15% from 3.82% YoY
• Net charge-offs increased to 2.31% from 1.97% YoY

Insights

Financial Analyst

Medallion Bank shows mixed financial performance in Q3 2024. While total loan portfolio grew 13% to $2.4 billion, net income decreased to $15.5 million from $17.2 million year-over-year. The decline in profitability is primarily due to increased credit loss provisions of $20.2 million, up from $14.0 million.

Key concerns include rising delinquency rates in both recreation and home improvement segments, with recreation loans showing 4.15% delinquency (up from 3.82%) and higher net charge-offs at 3.18% (up from 2.67%). However, the bank maintains strong capitalization with a 15.66% Tier 1 leverage ratio and healthy net interest margin of 8.44%.

Credit Risk Analyst

The increasing credit loss provisions and deteriorating loan quality metrics warrant attention. The recreation lending segment, comprising 65% of the loan portfolio, shows concerning trends with delinquencies reaching $64.6 million. The higher allowance for credit losses at 4.53% reflects growing credit risk in the portfolio.

While home improvement loans maintain better credit metrics with 1.02% delinquency rate, the upward trend in charge-offs across both segments suggests potential pressure on asset quality amid challenging economic conditions. The bank's strategic focus on credit quality and managed growth is prudent given these trends.

SALT LAKE CITY, Oct. 29, 2024 (GLOBE NEWSWIRE) -- Medallion Bank (Nasdaq: MBNKP, the “Bank”), an FDIC-insured bank specializing in consumer loans for the purchase of recreational vehicles, boats, and home improvements, as well as loan products and services offered through fintech strategic partners, today announced its results for the quarter ended September 30, 2024. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

2024 Third Quarter Highlights

• Net income of $15.5 million, compared to $17.2 million in the prior year quarter.
• Net interest income of $53.2 million, compared to $48.7 million in the prior year quarter.
• Net interest margin of 8.44%, compared to 8.70% in the prior year quarter.
• Total provision for credit losses was $20.2 million, compared to $14.0 million in the prior year quarter. Total provision for credit losses included $2.2 million of net taxi medallion recoveries, compared to $1.7 million of net taxi medallion recoveries in the prior year quarter.
• Annualized net charge-offs were 2.31% of average loans outstanding, compared to 1.97% in the prior year quarter.
• Annualized return on assets and return on equity were 2.47% and 16.72%, respectively, compared to 3.06% and 20.46% for the prior year period.
• The total loan portfolio grew 13% from September 30, 2023 to $2.4 billion as of September 30, 2024.
• Total assets were $2.6 billion and the Tier 1 leverage ratio was 15.66% at September 30, 2024.

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “Earnings grew over the sequential quarter as combined recreation and home improvement loan origination volumes reached their anticipated peak for 2024. Net interest income rose to $53 million on more than $72 million of total interest income. As is typical for the time of year, delinquency rose compared to the second quarter while the net charge-off rate was essentially flat. Aided by the new fintech relationship announced in September, we originated $40 million in loans through our fintech strategic partners during the quarter. The strategic partnership program, which we have approached with caution and patience, is expected to grow steadily in the coming periods as our partners grow. Though overall demand for our products remains strong, we continue to prioritize credit quality and managed growth that maintains our market position.”

Recreation Lending Segment

• The Bank’s recreation loan portfolio grew 15% to $1.555 billion as of September 30, 2024, compared to $1.346 billion at September 30, 2023. Loan originations were $139.1 million, compared to $92.6 million in the prior year quarter.
• Net interest income was $40.2 million, compared to $36.5 million in the prior year quarter.
• Recreation loans were 65% of loans receivable as of September 30, 2024, compared to 64% at September 30, 2023.
• Delinquencies 30 days or more past due were $64.6 million, or 4.15%, of recreation loans as of September 30, 2024, compared to $51.4 million, or 3.82%, at September 30, 2023.
• Annualized net charge-offs were 3.18% of average recreation loans outstanding, compared to 2.67% in the prior year quarter.
• The provision for recreation credit losses was $17.5 million and the allowance for credit losses was 4.53% of the outstanding balance, compared to $11.9 million and 4.24% of the outstanding balance in the prior year quarter.

Home Improvement Lending Segment

• The Bank’s home improvement loan portfolio grew 8% to $814.1 million as of September 30, 2024, compared to $750.5 million at September 30, 2023. Loan originations were $96.5 million, compared to $79.3 million in the prior year quarter.
• Net interest income was $12.6 million, compared to $11.9 million in the prior year quarter.
• Home improvement loans were 34% of loans receivable as of September 30, 2024, compared to 36% at September 30, 2023.
• Delinquencies 30 days or more past due were $8.3 million, or 1.02%, of home improvement loans as of September 30, 2024, compared to $6.8 million, or 0.90%, at September 30, 2023.
• Annualized net charge-offs were 1.76% of average home improvement loans outstanding, compared to 1.61% in the prior year quarter.
• The provision for home improvement credit losses was $4.9 million and the allowance for credit losses was 2.42% of the outstanding balance, compared to $3.9 million and 2.31% of the outstanding balance in the prior year quarter.

Series F Preferred Stock Dividend

On October 24, 2024, 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 January 2, 2025, to holders of record at the close of business on December 16, 2024.

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 “remains,” “anticipated,” “expected,” “continue,” “maintain” or the negative versions of these words or other comparable words or phrases of a future or forward-looking nature. These statements may relate to our future earnings, returns, capital levels, sources of funding, 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, 2023, 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. Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period.  

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

MEDALLION BANK STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2024			2023			2024			2023
Total interest income	$	72,352		$	62,193		$	202,079		$	173,414
Total interest expense		19,193			13,446			50,470			33,384
Net interest income		53,159			48,747			151,609			140,030
Provision for credit losses		20,153			14,024			55,345			26,740
Net interest income after provision for credit losses		33,006			34,723			96,264			113,290
Other non-interest income		645			968			2,116			1,263
Non-interest expense
Salaries and benefits		5,035			5,024			14,971			14,004
Loan servicing		3,158			3,007			9,074			8,723
Collection costs		1,604			1,509			4,578			4,473
Regulatory fees		961			1,021			2,826			2,484
Professional fees		368			450			1,185			1,612
Information technology		317			252			858			750
Occupancy and equipment		193			211			626			625
Other		875			839			2,685			2,705
Total non-interest expense		12,511			12,313			36,803			35,376
Income before income taxes		21,140			23,378			61,577			79,177
Provision for income taxes		5,661			6,222			16,583			21,268
Net income	$	15,479		$	17,156		$	44,994		$	57,909
Less: Preferred stock dividends		1,512			1,512			4,535		$	4,535
Net income attributable to common shareholder	$	13,967		$	15,644		$	40,459		$	53,374

MEDALLION BANK BALANCE SHEETS (UNAUDITED)
(In thousands)	September 30, 2024				December 31, 2023				September 30, 2023
Assets
Cash and federal funds sold	$	148,446			$	110,043			$	100,192
Investment securities, available-for-sale		56,754				54,282				53,175
Loans, inclusive of net deferred loan acquisition cost and fees		2,374,673				2,100,338				2,101,786
Allowance for credit losses		(90,784	)			(79,283	)			(75,094	)
Loans, net		2,283,889				2,021,055				2,026,692
Loan collateral in process of foreclosure		3,424				4,165				7,658
Fixed assets and right-of-use lease assets, net		9,275				8,140				7,705
Deferred tax assets		13,338				12,761				11,634
Accrued interest receivable		14,013				13,439				13,405
Other assets		38,472				38,171				37,595
Total assets	$	2,567,611			$	2,262,056			$	2,258,056
Liabilities and Shareholders’ Equity
Liabilities
Deposits and other funds borrowed	$	2,143,132			$	1,866,657			$	1,865,096
Accrued interest payable		4,880				4,029				3,052
Income tax payable		25,559				21,219				30,472
Other liabilities		17,301				17,509				18,397
Due to affiliates		1,038				849				942
Total liabilities		2,191,910				1,910,263				1,917,959
Shareholder’s Equity
Series E Preferred stock		26,303				26,303				26,303
Series F Preferred stock		42,485				42,485				42,485
Common stock		1,000				1,000				1,000
Additional paid in capital		77,500				77,500				77,500
Accumulated other comprehensive loss, net of tax		(3,080	)			(4,529	)			(5,794	)
Retained earnings		231,493				209,034				198,603
Total shareholders’ equity		375,701				351,793				340,097
Total liabilities and shareholders’ equity	$	2,567,611			$	2,262,056			$	2,258,056

FAQ

What was Medallion Bank's net income for Q3 2024?

Medallion Bank reported net income of $15.5 million for Q3 2024, compared to $17.2 million in the prior year quarter.

How much did Medallion Bank's loan portfolio grow in Q3 2024?

Medallion Bank's total loan portfolio grew 13% year-over-year to $2.4 billion as of September 30, 2024.

What is the dividend amount declared for Medallion Bank's Series F Preferred Stock?

Medallion Bank declared a quarterly cash dividend of $0.50 per share on its Series F Preferred Stock, payable on January 2, 2025.

What was Medallion Bank's provision for credit losses in Q3 2024?

The total provision for credit losses was $20.2 million in Q3 2024, compared to $14.0 million in the prior year quarter.