Medallion Financial Corp. Reports 2023 Fourth Quarter and Full-Year Results
- Strong financial performance in Q4 and full-year 2023 with record earnings and increased loan originations.
- Net interest income increased by 12% in Q4 and 17% for the full year.
- Quarterly dividend raised by 25%.
- Total assets grew by 15% to $2.6 billion.
- President Andrew Murstein expressed satisfaction with the company's financial achievements and long-term prospects.
- None.
Insights
The reported increase in net income and net interest income by Medallion Financial Corp. signifies robust earnings growth, which is a positive indicator for investors. The growth in net income from $13.1 million to $14.3 million in the fourth quarter and a substantial annual increase from $43.8 million to $55.1 million, reflects a strong profitability trajectory. Additionally, the 12% growth in quarterly net interest income and 17% annual growth suggest an effective interest-earning strategy despite a competitive lending environment.
However, the decrease in net interest margin on both net and gross loans year-over-year indicates a potential compression in profitability per loan, which could be a concern if the trend continues. The increase in the credit loss provision, including a substantial benefit from taxi medallion recoveries, indicates a conservative approach to potential loan losses, which is prudent given the current economic uncertainties.
The dividend increase by 25% signals confidence in the company's financial health and a commitment to shareholder returns. This action, combined with the share repurchase program, reflects a shareholder-friendly capital allocation policy. However, investors should monitor the sustainability of these payouts in relation to earnings and cash flow.
Medallion's loan origination figures show a slight decrease year-over-year, which could be indicative of either a strategic shift or a response to market conditions. The recreation lending segment saw a drop in originations but an increase in net interest income, suggesting a focus on higher-yielding loans. The home improvement lending segment also experienced significant growth in loans and net interest income, which may point to strategic positioning in a market with high consumer demand.
The decline in the taxi medallion lending segment aligns with broader industry trends, as the value of taxi medallions has diminished with the rise of ride-sharing services. Medallion's ability to collect cash on related assets and reduce exposure in this segment is a positive move to mitigate risk.
It's also noteworthy that the company's total assets and loan portfolio have grown, indicating an overall expansion of the business. This growth, coupled with a diversified lending portfolio, positions Medallion to potentially weather economic fluctuations and capitalize on various consumer and commercial lending opportunities.
The financial results of Medallion Financial Corp. should be evaluated within the broader context of the current economic climate. The increase in allowance for credit losses across lending segments suggests an anticipation of potential economic headwinds, such as rising interest rates or a slowdown in consumer spending. The higher allowances, particularly in the recreation and home improvement segments, could be seen as a buffer against potential loan defaults in an uncertain economic environment.
The company's capital allocation to dividends and stock repurchases should be weighed against the potential need for liquidity and capital reserves, especially if economic conditions deteriorate. The balance between rewarding shareholders and maintaining financial flexibility is crucial for long-term stability.
Furthermore, the reported growth in loans and assets indicates a potentially aggressive growth strategy. While this can lead to greater market share and revenue, it also requires careful risk management, especially in sectors that may be sensitive to economic shifts, such as discretionary consumer spending on recreation and home improvements.
NEW YORK, Feb. 20, 2024 (GLOBE NEWSWIRE) -- Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the “Company”), a specialty 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 and full-year ended December 31, 2023.
2023 Fourth Quarter Highlights
- Net income was
$14.3 million , or$0.60 per share, compared to$13.1 million , or$0.57 per share, in the prior year quarter. - Net interest income grew
12% to$49.0 million from$43.6 million in the prior year quarter. - Net interest margin on net loans was
8.50% , compared to8.86% in the prior year quarter, and on gross loans it was8.20% , compared to8.59% in the prior year quarter. - Loan originations were
$169.1 million , compared to$191.9 million in the prior year quarter. - The credit loss provision increased to
$10.8 million from$9.0 million in the prior year quarter and included a net benefit of$12.1 million related to taxi medallion recoveries. - Beginning with the fourth quarter, the Board of Directors increased the quarterly dividend
25% to$0.10 per share.
2023 Full-Year Highlights
- Net income was
$55.1 million , or$2.37 per share, compared to$43.8 million , or$1.83 per share, in the prior year. - Net interest income grew
17% to$188.1 million from$160.4 million in the prior year. - Net interest margin on net loans was
8.68% , compared to9.05% in the prior year quarter, and on gross loans it was8.38% , compared to8.73% in the prior year. - Loan originations were
$960.0 million , compared to$983.9 million in the prior year. - Loans grew
16% to$2.2 billion as of December 31, 2023, compared to$1.9 billion a year ago. - The credit loss provision increased to
$37.8 million from$30.1 million in the prior year and included a net benefit of$26.3 million related to taxi medallion recoveries. - Total assets grew to
$2.6 billion at December 31, 2023, a15% increase over December 31, 2022.
Executive Commentary – Andrew Murstein, President of Medallion
"Once again, we continue to be quite pleased with our bottom-line results. This was our highest annual total earnings and highest annual earnings per share in our history, with each of our businesses contributing to the success. In the past three years we have generated
Business Segment Highlights
Recreation Lending Segment
- Originations were
$62.7 million during the quarter, compared to$79.3 million a year ago. - Recreation loans grew
13% to$1.3 billion , or60% of total loans, as of December 31, 2023, compared to$1.2 billion , or62% of total loans, a year ago. - Net interest income grew
8% to$35.2 million for the quarter, from$32.7 million in the prior year quarter. - The average interest rate was
14.79% at year-end, compared to14.28% a year ago. - Recreation loans 90 days or more past due were
$9.1 million , or0.70% of gross recreation loans, as of December 31, 2023, compared to$7.4 million , or0.64% , a year ago. - Allowance for credit loss rate was
4.31% at year-end, compared to3.55% a year ago and4.39% with the implementation of CECL on January 1, 2023.
Home Improvement Lending Segment
- Originations were
$66.0 million during the quarter, compared to$97.1 million a year ago. - Home improvement loans grew
21% to$760.6 million , or34% of total loans, as of December 31, 2023, compared to$626.4 million , or33% of total loans, a year ago. - Net interest income grew
16% to$11.7 million for the quarter, from$10.1 million in the prior year quarter. - The average interest rate was
9.51% at year-end, compared to8.65% a year ago. - Home improvement loans 90 days or more past due were
$1.5 million , or0.20% of gross home improvement loans, as of December 31, 2023, compared to$0.6 million , or0.09% , a year ago. - Allowance for credit loss rate was
2.76% at year-end, compared to1.81% a year ago and2.05% with the implementation of CECL on January 1, 2023.
Commercial Lending Segment
- Commercial loans were
$114.8 million at 2023, compared to$92.9 million a year ago. - The average interest rate on the portfolio was
12.87% , compared to12.23% a year ago.
Taxi Medallion Lending Segment
- The Company collected
$16.2 million of cash on taxi medallion related assets during the quarter and$45.2 million of cash on taxi medallion-related assets during the year, with net recoveries contributing earnings of$0.33 per share for the quarter and$0.93 per share for the year. - Total net taxi medallion assets declined to
$12.1 million (comprised of$2.1 million of loans net of allowance for credit losses and$10.0 million of loan collateral in process of foreclosure), a51% reduction from a year ago, and represented less than0.5% of the Company’s total assets, as of December 31, 2023.
Capital Allocation
Quarterly Dividend
- The Board of Directors declared a quarterly dividend of
$0.10 per share, payable on March 28, 2024, to shareholders of record at the close of business on March 15, 2024.
Conference Call Information
The Company will host a conference call to discuss its fourth quarter and full-year financial results tomorrow, Wednesday, February 21, 2024, at 9:00 a.m. Eastern time.
In connection with its earnings release, the Company has updated its quarterly supplement presentation, which is now available at www.medallion.com.
How to Participate
- Date: Wednesday, February 21, 2024
- Time: 9:00 a.m. Eastern time
- U.S. dial-in number: (877) 407-0789
- International dial-in number: (201) 689-8562
- Live webcast: Link to Webcast of 4Q23 Earnings Call
A link to the live audio webcast of the conference call will also be available at the Company’s IR website.
Replay Information
The webcast replay will be available at the Company's IR website until the next quarter’s results are announced.
The conference call replay will be available following the end of the call until February 29, 2024
- U.S. dial-in number: (844) 512-2921
- International dial-in number: (412) 317-6671
- Passcode: 1018 5725
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, the impact of the pending SEC litigation, expectations regarding our loan portfolio, including collections on our medallion loans, 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 current economy, whether inflation or the risk of recession, 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. In addition to risks relating to the current economy, 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 2022 Annual Report on Form 10-K.
Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com
| MEDALLION FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| December 31, | ||||||||
| (Dollars in thousands, except share and per share data) | 2023 | 2022 | ||||||
| Assets | ||||||||
| Cash, cash equivalents, and federal funds sold | $ | 149,845 | $ | 105,598 | ||||
| Investment and equity securities | 65,712 | 58,785 | ||||||
| Loans | 2,215,886 | 1,916,953 | ||||||
| Allowance for credit losses | (84,235 | ) | (63,845 | ) | ||||
| Net loans receivable | 2,131,651 | 1,853,108 | ||||||
| Goodwill and intangible assets, net | 171,394 | 172,838 | ||||||
| Property, equipment, and right-of-use lease asset, net | 14,076 | 13,168 | ||||||
| Accrued interest receivable | 13,538 | 12,613 | ||||||
| Loan collateral in process of foreclosure | 11,772 | 21,819 | ||||||
| Other assets | 29,839 | 21,950 | ||||||
| Total assets | $ | 2,587,827 | $ | 2,259,879 | ||||
| Liabilities | ||||||||
| Deposits | $ | 1,866,657 | $ | 1,607,110 | ||||
| Long-term debt | 235,544 | 214,320 | ||||||
| Deferred tax liabilities, net | 21,207 | 26,753 | ||||||
| Short-term borrowings | 8,000 | 5,000 | ||||||
| Operating lease liabilities | 7,019 | 8,408 | ||||||
| Accrued interest payable | 6,822 | 4,790 | ||||||
| Accounts payable and accrued expenses | 30,804 | 22,974 | ||||||
| Total liabilities | 2,176,053 | 1,889,355 | ||||||
| Total stockholders’ equity | 342,986 | 301,736 | ||||||
| Non-controlling interest in consolidated subsidiaries | 68,788 | 68,788 | ||||||
| Total equity | 411,774 | 370,524 | ||||||
| Total liabilities and equity | $ | 2,587,827 | $ | 2,259,879 | ||||
| Number of shares outstanding | 23,449,646 | 23,061,673 | ||||||
| Book value per share | $ | 14.63 | $ | 13.08 | ||||
| MEDALLION FINANCIAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||||
| Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
| (Dollars in thousands, except share and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Total interest income | $ | 67,585 | $ | 54,513 | $ | 251,040 | $ | 196,621 | ||||||||
| Total interest expense | 18,567 | 10,926 | 62,946 | 36,185 | ||||||||||||
| Net interest income | 49,018 | 43,587 | 188,094 | 160,436 | ||||||||||||
| Provision for credit losses | 10,764 | 9,013 | 37,810 | 30,059 | ||||||||||||
| Net interest income after provision for credit losses | 38,254 | 34,574 | 150,284 | 130,377 | ||||||||||||
| Other income (loss) | ||||||||||||||||
| Gain (loss) on equity investments | 2,989 | (206 | ) | 5,178 | 2,779 | |||||||||||
| Gain on sale of loans and medallion | 413 | 387 | 4,992 | 5,448 | ||||||||||||
| Write-down of loan collateral in process of foreclosure | (1,393 | ) | (49 | ) | (1,696 | ) | (657 | ) | ||||||||
| Other income, net | 979 | 738 | 2,846 | 1,956 | ||||||||||||
| Total other income, net | 2,988 | 870 | 11,320 | 9,526 | ||||||||||||
| Other expenses | ||||||||||||||||
| Salaries and employee benefits | 9,757 | 7,421 | 37,562 | 31,130 | ||||||||||||
| Loan servicing fees | 2,459 | 2,140 | 9,543 | 8,371 | ||||||||||||
| Collection costs | 1,271 | 1,379 | 6,000 | 5,314 | ||||||||||||
| Professional fees | 1,663 | 948 | 5,886 | 13,054 | ||||||||||||
| Regulatory fees | 710 | 797 | 3,194 | 2,418 | ||||||||||||
| Rent expense | 617 | 614 | 2,472 | 2,378 | ||||||||||||
| Amortization of intangible assets | 361 | 361 | 1,445 | 1,445 | ||||||||||||
| Other expenses | 2,246 | 2,141 | 9,466 | 7,943 | ||||||||||||
| Total other expenses | 19,084 | 15,801 | 75,568 | 72,053 | ||||||||||||
| Income before income taxes | 22,158 | 19,643 | 86,036 | 67,850 | ||||||||||||
| Income tax provision | 6,328 | 5,071 | 24,910 | 17,963 | ||||||||||||
| Net income after taxes | 15,830 | 14,572 | 61,126 | 49,887 | ||||||||||||
| Less: income attributable to the non-controlling interest | 1,512 | 1,512 | 6,047 | 6,047 | ||||||||||||
| Total net income attributable to Medallion Financial Corp. | $ | 14,318 | $ | 13,060 | $ | 55,079 | $ | 43,840 | ||||||||
| Basic net income per share | $ | 0.63 | $ | 0.59 | $ | 2.45 | $ | 1.86 | ||||||||
| Diluted net income per share | $ | 0.60 | $ | 0.57 | $ | 2.37 | $ | 1.83 | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 22,608,243 | 22,286,272 | 22,510,435 | 23,583,049 | ||||||||||||
| Diluted | 23,765,866 | 22,725,292 | 23,248,323 | 23,927,342 | ||||||||||||
| Dividends declared per common share | $ | 0.10 | $ | 0.08 | $ | 0.34 | $ | 0.32 | ||||||||
FAQ
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