Medallion Financial Corp. Reports 2021 Second Quarter Results

Rhea-AI Summary

Medallion Financial Corp. (NASDAQ: MFIN) reported robust financial results for Q2 2021 with a net income of $10.3 million, or $0.41 per share, reversing a loss from the previous year. Medallion Bank achieved record net income of $17.5 million. Net interest income rose by 10.1% to $29.5 million, while the net consumer loan portfolio grew to $1.2 billion. Delinquencies decreased to 0.23% of total loans. The company is focused on growing its consumer business and managing risk amid a successful quarter.

Positive

• Net income of $10.3 million for Q2 2021, compared to a loss of $4.0 million in Q2 2020.
• Record net income for Medallion Bank at $17.5 million.
• Net interest income increased by 10.1% to $29.5 million.
• Consumer loan originations rose by 31% to $197.5 million.
• Net consumer loan portfolio increased to $1.2 billion.

Negative

• A non-cash loss of $2.4 million related to owned taxi medallions.
• Decline in net commercial loan portfolio to $66.2 million from $68.1 million.

NEW YORK, Aug. 02, 2021 (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, announced today its 2021 second quarter results.

2021 Second Quarter Highlights

• Net income was $10.3 million, or $0.41 per share, compared to a net loss of $4.0 million, or $0.16 per share, in the prior year quarter.
• Medallion Bank net income was a record $17.5 million for the quarter, compared to $1.8 million in the prior year quarter.
• Net interest income grew 10.1% to $29.5 million, primarily reflecting the contribution from the consumer lending segments, compared to $26.8 million in the 2020 quarter.
• Net interest margin was 8.84%, compared to 8.23% in the prior year quarter.
• Net income from the Company’s consumer and commercial lending segments increased to $16.2 million in the quarter, compared to $9.0 million a year ago.
• Net loan portfolios grew 13% for recreation and 30% for home improvement from June 30, 2020.
• Consumer loan originations were up 31% from the prior year quarter to $197.5 million.
• Our consumer loan portfolio was 94% of total net loans receivable as of June 30, 2021.
• Total assets were $1.74 billion as of June 30, 2021, compared to $1.65 billion as of June 30, 2020.

Executive Commentary – Andrew Murstein, President of Medallion

“This quarter we maintained the strength and momentum in Medallion Bank, which is our top priority.  That is the fastest growing and most profitable part of our Company.  Our growth strategy is clear; we are investing in our consumer business and signing fintech strategic partnerships.  At the same time, we seek to minimize our risk profile by maintaining the strong, and even improving, credit quality benchmarks we have in place.  We also made progress on advancing our exit strategy for our non-core assets.”

Business Segment Highlights

Consumer Lending Segments

• Our net consumer loan portfolio was $1.2 billion as of June 30, 2021, compared to $1.0 billion on June 30, 2020.  
• Net interest income grew 14% to $33.1 million for the quarter, compared to $29.1 million in the prior year quarter. 
• The average interest rate on the portfolio was 13.14% at quarter-end, compared to 14.14% a year ago.  
• Consumer loans 90 days or more past due were $2.8 million, or 0.23% of total gross loans as of June 30, 2021, compared to $3.5 million, or 0.33%, a year ago. Delinquencies continued to be lower than historical averages due to solid performance by our borrowers.
• Net income for the second quarter was $15.8 million, compared to $8.6 million in the 2020 second quarter.

Commercial Lending Segment

• We originated $11.1 million of new loans during the 2021 second quarter.
• The Company’s net commercial loan portfolio was $66.2 million as of quarter-end, compared to $68.1 million a year ago. 
• The average interest rate on the portfolio was 12.69%, compared to 13.38% a year ago. 
• Net income for the second quarter was $0.4 million, in line with the 2020 quarter.

Medallion Lending Segment

• During the quarter, the Company collected $2.4 million of principal payments and received $3.2 million in connection with loans in the process of foreclosure. 
• Total gross medallion exposure (which is net of loan loss allowance and includes loans in process of foreclosure and remarketed assets) declined to $53.9 million, or 3.1% of total assets, as of June 30, 2021.
• The Company recorded a non-cash $2.4 million loss, net of tax, related to its owned taxi medallions and outstanding loans in the Chicago market. 

Corporate Initiatives

• The Company retained an investment bank to advise and assist in evaluating strategic alternatives for some of its non-core assets.
• The Company recognized a gain of $2.4 million, net of tax, in connection with a partial sale of approximately 44% of an investment in a fintech company in which the Company made a $250,000 investment.
• The Company settled substantially all bank debt during the quarter, negotiating discounts and recognizing a gain on the extinguishment of debt.

Concluding Executive Commentary – Larry Hall, CFO of Medallion

“We just concluded one of our most profitable quarters ever driven by the strength of our Medallion Bank subsidiary, which continues to execute exceptionally well and it had its most profitable quarter in its 18-year history. Most importantly, the foundation and strategy are in place as we continue to strive for shareholder value over the years ahead.”

Conference Call Information

As announced on July 15, 2021, the Company will host a conference call to discuss its second quarter financial results on Tuesday, August 3, 2021, at 9:00 a.m. Eastern time.

• Conference Call Dial-In: (855) 327-6837 (toll-free) or (631) 891-4304 (direct).  Please dial the number 10 minutes prior to the scheduled start time.
• Live Webcast: available on Medallion’s website at http://www.medallion.com/investors.html.
• Call Replay: available following the end of the call through Tuesday, August 10, 2021, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (direct), passcode 10015793.  
• Webcast Replay: available at http://www.medallion.com/investors.html until the next quarter’s results are announced.

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About Medallion Financial Corp.
Medallion Financial Corp., primarily through its wholly-owned subsidiary Medallion Bank, is a finance company that originates and services consumer loans and loans in various commercial industries.  Medallion Financial Corp. has lent more than $9 billion since its initial public offering in 1996.

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, and growth.  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, for a description of certain risks to which Medallion is or may be subject, please refer to the factors discussed under the heading “Risk Factors” in Medallion’s 2020 Annual Report on Form 10-K.

Company Contact:

Investor Relations
212-328-2176
InvestorRelations@medallion.com

MEDALLION FINANCIAL CORP. CONSOLIDATED STATEMENT OF OPERATIONS
	For the Three Months Ended June 30,							For the Six Months Ended June 30,
(Dollars in thousands, except per share data)		2021			2020				2021			2020
Total interest income	$	37,375		$	35,588			$	74,455		$	71,130
Total interest expense		7,884			8,835				16,291			17,835
Net interest income		29,491			26,753				58,164			53,295
Provision (benefit) for loan losses		(682	)		16,941				2,337			33,482
Net interest income after provision for loan losses		30,173			9,812				55,827			19,813
Other income (loss)
Change in collateral on loans in process of foreclosure		(2,162	)		(983	)			(4,947	)		(7,269	)
Sponsorship and race winnings		4,345			3,626				6,818			6,199
Gain on the extinguishment of debt		2,859			-				4,626			-
Gain (Impairment) on equity investments		3,205			-				3,205			(3,559	)
Other income (loss)		(480	)		613				1			905
Total other income (loss)		7,767			3,256				9,703			(3,724	)
Other expenses
Salaries and employee benefits		7,901			6,702				13,586			13,635
Race team related expenses		2,674			1,818				4,796			3,948
Loan servicing fees		1,731			1,729				3,378			3,341
Collection costs		1,641			1,461				2,873			2,690
Professional fees		2,224			1,319				2,731			4,908
Other expenses		3,649			3,157				7,098			6,935
Total other expenses		19,820			16,186				34,462			35,457
Income (loss) before income taxes		18,120			(3,118	)			31,069			(19,368	)
Income tax (provision) benefit		(6,528	)		853				(10,406	)		4,102
Net income (loss) after taxes		11,592			(2,265	)			20,663			(15,266	)
Less: income attributable to the non-controlling interest		1,325			1,712				1,964			2,354
Total net income (loss) attributable to Medallion Financial Corp.	$	10,267		$	(3,977	)		$	18,698		$	(17,620	)
Basic net income (loss) per share	$	0.42		$	(0.16	)		$	0.76		$	(0.72	)
Diluted net income (loss) per share		0.41			(0.16	)			0.75			(0.72	)
Weighted average common shares outstanding
Basic		24,595,822			24,444,677				24,557,511			24,423,225
Diluted		24,950,512			24,444,677				24,923,023			24,423,225

MEDALLION FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS
		June 30,			December 31,			June 30,
(Dollars in thousands, except shares and per share data)			2021			2020			2020
Assets
Cash and federal funds sold		$	91,553		$	112,040		$	103,884
Equity investments and investment securities			58,397			56,538			57,884
Loans			1,340,567			1,229,838			1,260,594
Allowance for loan losses			(46,946	)		(57,548	)		(66,977	)
Net loans receivable			1,293,621			1,172,290			1,193,617
Loan collateral in process of foreclosure			49,039			54,560			47,375
Goodwill and intangible assets			201,173			201,893			202,617
Other assets			45,964			45,090			46,366
Total assets		$	1,739,747		$	1,642,411		$	1,651,743
Liabilities
Accounts payable, accrued expenses, and accrued interest payable		$	23,393		$	19,575		$	25,144
Deposits			1,152,068			1,065,398			1,075,322
Short-term borrowings			8,016			87,334			60,889
Deferred tax liabilities and other tax payables			8,591			807			5,562
Operating lease liabilities			9,894			11,018			11,655
Long-term debt			214,971			153,718			154,874
Total liabilities			1,416,933			1,337,850			1,333,446
Commitments and contingencies.
Total stockholders’ equity			250,718			231,408			247,642
Non-controlling interests in consolidated subsidiaries			72,096			73,153			70,655
Total equity			322,814			304,561			318,297
Total liabilities and equity		$	1,739,747		$	1,642,411		$	1,651,743
Number of shares outstanding			25,061,764			24,877,628			24,816,376
Book value per share		$	10.00		$	9.30		$	9.98

FAQ

What were Medallion Financial Corp's Q2 2021 results?

Medallion Financial Corp reported a net income of $10.3 million or $0.41 per share in Q2 2021, reversing a loss from the previous year.

How did Medallion Bank perform in Q2 2021?

Medallion Bank achieved a record net income of $17.5 million in Q2 2021, significantly up from $1.8 million in the prior year.

What is the status of Medallion Financial Corp's consumer loan portfolio?

The consumer loan portfolio grew to $1.2 billion as of June 30, 2021, a significant increase from $1.0 billion a year prior.

What challenges did Medallion Financial face in Q2 2021?

The company recorded a non-cash loss of $2.4 million related to taxi medallions and saw a decline in its commercial loan portfolio.

What was the net interest income for Medallion Financial in Q2 2021?

Net interest income for Q2 2021 was $29.5 million, marking a 10.1% increase from the previous year's quarter.