Medallion Financial Corp. Reports 2024 First Quarter Results

Rhea-AI Summary

Medallion Financial Corp. reported its 2024 first quarter results, with net income of $10.0 million, or $0.42 per share, a decrease from the prior year quarter. Cash collected on taxi medallion-related assets was $3.1 million, compared to $13.2 million in the prior year. Loan originations were $173.1 million, a decrease from the prior year. Total loans grew to $2.2 billion, with a credit loss provision of $17.2 million. The company repurchased shares and declared a quarterly cash dividend of $0.10 per share.

Positive

• Net interest income grew 10% to $47.9 million, loans grew 12% to $2.2 billion, and the company repurchased shares at an average cost of $8.05 per share.

Negative

• Net income decreased to $10.0 million, loan originations decreased, and the credit loss provision increased to $17.2 million.

Insights

Financial Analyst

The reported net income of $10.0 million, or $0.42 per share, reflects a decrease from the $15.4 million, or $0.67 per share, earned in the same quarter of the previous year. This suggests a potential concern for investors, particularly in terms of profitability and growth trajectory. The decline is partially attributed to lower recoveries on taxi medallion-related assets, which fell to $0.9 million compared to $7.1 million last year, impacting per-share earnings by $0.04 versus $0.28. The increased provision for credit losses, which rose significantly to $17.2 million from $4.0 million, could indicate a more cautious approach by the company to potential default risks. On the positive side, net interest income growth of 10% and an expansion in loan portfolios, with overall loans growing 12%, are indicative of a solid operational footing.

Market Research Analyst

An interesting development is the company's strategic approach to capital allocation, as evidenced by the repurchase of 264,160 shares at an average cost of $8.05 per share. This buyback, totaling $2.1 million, in conjunction with the declared quarterly dividend of $0.10 per share, signals a commitment to returning value to shareholders. However, the reduction in loan originations, particularly in the home improvement segment from $95.0 million to $51.6 million, may raise concerns about the company's market position and growth prospects in this area. As a retail investor, it would be essential to monitor subsequent quarters to determine whether this is part of a strategic shift or a sign of weakening demand.

Risk Management Analyst

The changes in net interest margins on net loans from 8.71% to 8.39% and on gross loans from 8.42% to 8.10%, albeit slight, could reflect a more competitive lending environment or a shift in the company's lending portfolio mix. Additionally, the increase in past-due recreation and home improvement loans, though still representing a small fraction of gross loans, warrants monitoring as an early indicator of potential credit quality issues. Prudent risk assessment by investors would consider these factors in conjunction with macroeconomic conditions that might affect borrower solvency.

NEW YORK, April 30, 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 ended March 31, 2024.

2024 First Quarter Highlights

• Net income was $10.0 million, or $0.42 per share, compared to $15.4 million, or $0.67 per share, in the prior year quarter.
• $3.1 million of cash was collected on taxi medallion-related assets, with recoveries resulting in earnings of $0.04 per share compared to $13.2 million of cash collected, with recoveries resulting in earnings of $0.28 per share in the prior year quarter.
• Net interest income grew 10% to $47.9 million from $43.6 million in the prior year quarter.
• Net interest margin on net loans was 8.39%, compared to 8.71% in the prior year quarter, and on gross loans it was 8.10%, compared to 8.42% in the prior year quarter.
• Loan originations were $173.1 million, compared to $227.3 million in the prior year quarter.
• Loans grew 12% to $2.2 billion as of March 31, 2024, compared to $2.0 billion a year ago.
• The credit loss provision increased to $17.2 million from $4.0 million in the prior year quarter. The total provision included $0.9 million of net taxi medallion recoveries in the current quarter compared to $7.1 million of net taxi medallion recoveries in the prior year quarter.
• Repurchased 264,160 shares of its common stock at an average cost of $8.05 per share, for a total of $2.1 million.
• The Company declared and paid a quarterly cash dividend of $0.10 per share

Executive Commentary – Andrew Murstein, President of Medallion

“Once again, we continue to be pleased with our quarterly results, earning $10 million for the shareholders, or $0.42 per diluted share. The credit loss provision reflected the seasonality of our consumer lending business, starting relatively high early in the quarter and decreasing late in the quarter as delinquency declined from the December peak. Additionally, in the prior years we had significant recoveries related to taxi-medallion loans, which in the current quarter only totaled $0.9 million. As we look to the remainder of the year, we also expect consumer originations to increase as we hit our strong months. 

In addition to our quarterly dividend, we returned an additional $2.1 million to shareholders in the form of stock repurchases made in the first quarter. We’ll continue to assess our repurchase plans, being opportunistic at the right times, with the ultimate goal of providing long term value accretion to our shareholders.”

Business Segment Highlights

Recreation Lending Segment

• Originations were $105.8 million during the quarter, compared to $101.7 million a year ago.
• Recreation loans grew 13% to $1.4 billion as of March 31, 2024, compared to $1.2 billion a year ago.
• Recreation loans were 61% of total loans as of March 31, 2024, consistent with a year ago.
• Net interest income grew 7% to $34.3 million for the quarter, from $32.0 million in the prior year quarter.
• The average interest rate was 14.80% at quarter-end, compared to 14.42% a year ago.
• Recreation loans 90 days or more past due were $6.4 million, or 0.48% of gross recreation loans, as of March 31, 2024, compared to $4.2 million, or 0.36%, a year ago.
• Allowance for credit loss rate was 4.40% as of March 31, 2024, compared to 4.12% a year ago.

Home Improvement Lending Segment

• Originations were $51.6 million during the quarter, compared to $95.0 million a year ago.
• Home improvement loans grew 12% to $752.3 million as of March 31, 2024, compared to $669.6 million a year ago.
• Home improvement loans were 34% of total loans as of March 31, 2024, consistent with a year ago.
• Net interest income grew 14% to $11.8 million for the quarter, from $10.4 million in the prior year quarter.
• The average interest rate was 9.60% at quarter-end, compared to 8.83% a year ago.
• Home improvement loans 90 days or more past due were $1.4 million, or 0.18% of gross home improvement loans, as of March 31, 2024, compared to $0.4 million, or 0.07%, a year ago.
• Allowance for credit loss rate was 2.38% as of March 31, 2024, compared to 2.19% a year ago.

Commercial Lending Segment

• Commercial loans were $106.6 million at March 31, 2024, compared to $95.3 million a year ago.
• The average interest rate on the portfolio was 13.00%, compared to 12.42% a year ago.

Taxi Medallion Lending Segment

• The Company collected $3.1 million of cash on taxi medallion-related assets during the quarter.
• Total net taxi medallion assets declined to $10.8 million (comprised of $2.1 million of loans net of allowance for credit losses and $8.7 million of loan collateral in process of foreclosure), a 48% reduction from a year ago, and represented less than half a percent of the Company’s total assets, as of March 31, 2024.

Capital Allocation

Quarterly Dividend

• The Board of Directors declared the quarterly dividend of $0.10 per share, payable on May 31, 2024 to shareholders of record at the close of business on May 15, 2024.

Stock Repurchase Plan

• During the first quarter, the Company repurchased 264,160 shares of its common stock at an average cost of $8.05 per share, for a total of $2.1 million.
• As of March 31, 2024 the Company had $17.9 million remaining under its $40 million share repurchase program

Conference Call Information

The Company will host a conference call to discuss its first quarter financial results tomorrow, Wednesday, May 1, 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, May 1, 2024
• Time: 9:00 a.m. Eastern time
• U.S. dial-in number: (833) 816-1412
• International dial-in number: (412) 317-0504
• Live webcast: Link to Webcast of 1Q24 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 through Wednesday, May 8.

• U.S. dial-in number: (844) 512-2921
• International dial-in number: (412) 317-6671
• Access ID: 1018 8235

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 2023 Annual Report on Form 10-K.

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

MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Dollars in thousands, except share and per share data)		March 31, 2024				December 31, 2023				March 31, 2023
Assets
Cash, cash equivalents, and federal funds sold		$	169,125			$	149,845			$	132,382
Investment and equity securities			69,412				65,712				59,182
Loans			2,228,426				2,215,886				1,984,180
Allowance for credit losses			(83,827	)			(84,235	)			(70,280	)
Net loans receivable			2,144,599				2,131,651				1,913,900
Goodwill and intangible assets, net			171,033				171,394				172,478
Property, equipment, and right-of-use lease asset, net			14,024				14,076				13,401
Accrued interest receivable			12,673				13,538				12,235
Loan collateral in process of foreclosure			10,198				11,772				20,467
Other assets			27,698				29,839				27,625
Total assets		$	2,618,762			$	2,587,827			$	2,351,670
Liabilities
Deposits		$	1,879,061			$	1,866,657			$	1,695,300
Long-term debt			225,558				235,544				175,864
Short-term borrowings			32,500				8,000				38,500
Deferred tax liabilities, net			24,846				21,207				26,205
Operating lease liabilities			6,710				7,019				8,168
Accrued interest payable			6,077				6,822				5,152
Accounts payable and accrued expenses			26,186				30,804				27,328
Total liabilities			2,200,938				2,176,053				1,976,517
Total stockholders’ equity			349,036				342,986				306,365
Non-controlling interest in consolidated subsidiaries			68,788				68,788				68,788
Total equity			417,824				411,774				375,153
Total liabilities and equity		$	2,618,762			$	2,587,827			$	2,351,670
Number of shares outstanding			23,377,564				23,449,646				23,309,993
Book value per share		$	14.93			$	14.63			$	13.14

MEDALLION FINANCIAL CORP.‌
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)‌

		Three Months Ended March 31,
(Dollars in thousands, except share and per share data)		2024				2023
Total interest income		$	67,070			$	55,843
Total interest expense			19,153				12,240
Net interest income			47,917				43,603
Provision for credit losses			17,201				4,038
Net interest income after provision for credit losses			30,716				39,565
Other income (loss)
Gain (loss) on equity investments			4,167				(90	)
Gain on sale of loans and taxi medallions			588				1,855
Write-down of loan collateral in process of foreclosure			—				(252	)
Other income			648				570
Total other income, net			5,403				2,083
Other expenses
Salaries and employee benefits			9,457				8,836
Loan servicing fees			2,470				2,222
Collection costs			1,467				1,538
Regulatory fees			977				682
Professional fees			771				1,707
Rent expense			657				623
Amortization of intangible assets			361				360
Other expenses			2,065				2,425
Total other expenses			18,225				18,393
Income before income taxes			17,894				23,255
Income tax provision			6,358				6,382
Net income after taxes			11,536				16,873
Less: income attributable to the non-controlling interest			1,512				1,512
Total net income attributable to Medallion Financial Corp.		$	10,024			$	15,361
Basic net income per share		$	0.44			$	0.69
Diluted net income per share		$	0.42			$	0.67
Weighted average common shares outstanding
Basic			22,641,385				22,342,911
Diluted			23,765,045				22,975,457
Dividends declared per common share		$	0.10			$	0.08

FAQ

What was Medallion Financial Corp.'s net income for the 2024 first quarter?

Medallion Financial Corp. reported a net income of $10.0 million for the 2024 first quarter.

What was the loan origination amount for Medallion Financial Corp. in the first quarter of 2024?

Medallion Financial Corp. had loan originations of $173.1 million in the first quarter of 2024.

What was the total provision for credit losses in the 2024 first quarter?

The total provision for credit losses in the 2024 first quarter was $17.2 million.

How much did Medallion Financial Corp. pay in quarterly cash dividends in the first quarter of 2024?

Medallion Financial Corp. paid a quarterly cash dividend of $0.10 per share in the first quarter of 2024.