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Medallion Financial Corp. Reports 2011 First Quarter Results

Date : 05/05/2011 @ 9:07AM
Source : Business Wire
Stock : Medallion Financial Corp. (MM) (TAXI)
Quote : 11.32  -0.04 (-0.35%) @ 8:10PM
Medallion Financial Corp. (MM) share price Chart

Medallion Financial Corp. Reports 2011 First Quarter Results

Medallion Financial Corp. (MM) (NASDAQ:TAXI)
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Medallion Financial Corp. (Nasdaq: TAXI), a specialty finance company with a leading position servicing the taxicab industry and other niche markets, announced that earnings or net increase in net assets resulting from operations was $4,280,000 or $0.24 per diluted common share in the 2011 first quarter, up $4,171,000 from $109,000 or $0.01 per diluted common share in the 2010 first quarter. Net investment income after income taxes was $2,841,000 or $0.16 per diluted common share in the 2011 first quarter, up $609,000 or 27% from $2,232,000 or $0.13 per diluted common share in the 2010 first quarter.

On a combined basis with Medallion Bank, the Company’s unconsolidated wholly-owned portfolio company, net investment income after taxes was $7,218,000 or $0.41 per diluted common share for the 2011 first quarter, compared to $7,020,000, or $0.40 per diluted common share for the 2010 first quarter. As the Company continues to use Medallion Bank as a primary funding source, it refers more loans to Medallion Bank for origination to take advantage of current short term borrowing rates as low as 0.45%.

Medallion Financial’s net interest margin was 5.17% for the 2011 first quarter, up from 4.95% in the 2010 first quarter. On a combined basis with Medallion Bank, the net interest margin was approximately the same at 6.7% reflecting the continued low cost of funds at the bank, and the Bank’s higher-yielding consumer loan portfolio.

Andrew Murstein, President of Medallion Financial stated, “We are extremely pleased with the quarter’s operating results. We continued to see strong taxi medallion collateral values demonstrated through price appreciation in taxi medallions throughout 2010 and continuing to date through 2011. Prices for corporate medallions in New York City increased 23% since 2009, and are currently at over $930,000 per medallion through May 2011. We continue to experience zero losses on any taxi medallion loan we have originated. In addition, our loan to value ratio on our entire medallion portfolio is under 50%.”

Larry D. Hall, Chief Financial Officer of Medallion Financial stated, “We continue to focus very intently on the credit quality of our loan portfolios. Unlike many other financial institutions, our credit quality has not only remained very good, but has improved, even in these turbulent times. Loans more than 90 days past due, on a combined basis with Medallion Bank, were at 1.26% at March 31, 2011, down from 1.43% at year end, and down from 1.29% a year ago.

“Medallion Financial’s capital and liquidity levels remained strong with over $51,000,000 of availability from our funding sources and Medallion Financial’s leverage continues to be well under the industry norms with a debt to equity ratio of only 2.22 to 1. In addition, Medallion Bank had over $62,000,000 of deposit-raising capacity.”

Mr. Hall continued, “In addition, the Company recently entered into lending arrangements with new bank funding sources and extended its facility agreement with another bank. These arrangements will complement the Company’s existing facilities by providing the Company with greater liquidity and low funding costs to finance its growing taxi medallion portfolio. We could not be more pleased with our new and extended credit relationships. This is a reflection of many positive factors, including how well our existing medallion lending facilities have performed to date and the continued financial health, profitability, and prospects of Medallion Financial. These credit arrangements ensure we have the funding necessary to effectively grow the portfolio over the years ahead. We look forward to working with our funding sources and anticipate strong relationships going forward.”

Medallion Financial’s on-balance sheet taxicab medallion loan portfolio decreased slightly to $310,000,000 from $311,000,000 a year ago, due to the funding of most new loan originations by Medallion Bank, and the Company’s sale of loan participations to third party banks. However, total managed medallion loans increased 13% to $664,000,000 from $589,000,000 a year ago.

Medallion Financial’s on-balance sheet commercial loan portfolio was roughly flat at $74,000,000. The managed commercial loan portfolio increased 1% to $134,000,000 from $133,000,000 a year ago. Medallion Bank’s consumer loan portfolio increased 1% to $185,000,000 from $182,000,000 a year ago. Overall total managed assets increased 9% to $1.119 billion, from $1.027 billion a year ago.

The Company’s net asset value per share, or book value per share increased to $9.41, up from $9.13 one year ago, in part due to improved profitability in Medallion Bank, which is a taxable C Corp. and is entitled to retain its after tax earnings, and to the Company’s stock repurchase transactions. The Company also announced an increase in the dividend to $0.17 per share for the 2011 first quarter, bringing total amount to $0.63 over the last four quarters. This equates to a yield of approximately 7.0% based on the closing price of the Company’s stock on May 4, 2011. The current dividend will be paid on May 31, 2011, to shareholders of record on May 20, 2011. Since the Company’s initial public offering in 1996, the Company has paid in excess of $157,000,000 or $10.03 per share in dividends.

Medallion Financial Corp. is a specialty finance company with a leading position in the origination and servicing of loans financing the purchase of taxicab medallions and related assets. The Company also originates and services loans in other commercial industries, and its wholly-owned portfolio company, Medallion Bank, also originates and services consumer loans. The Company and its subsidiaries have lent over $3.9 billion to its taxicab industry and other small businesses.

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, and growth. Medallion’s actual results may differ significantly from the results discussed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those factors discussed under the heading “Risk Factors,” in Medallion’s 2010 Annual Report on Form 10-K.

MEDALLION FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

    Three Months Ended March 31, (Dollars in thousands, except per share data)   2011   2010 Total investment income $ 9,597   $ 9,230 Total interest expense   3,502       3,514   Net interest income   6,095       5,716         Total noninterest income   409       796     Salaries and benefits 2,207 3,056 Professional fees 331 591 Occupancy expense 227 334 Other operating expenses   898       299   Total operating expenses   3,663       4,280     Net investment income before income taxes 2,841 2,232 Income tax (provision) benefit   -       -   Net investment income after income taxes   2,841       2,232         Net realized gains (losses) on investments   9       (8,222 )   Net change in unrealized depreciation on investments (216 ) (1,244 ) Net change in unrealized appreciation on Medallion Bank and other controlled subsidiaries   1,646       7,343   Net unrealized appreciation on investments   1,430       6,099   Net realized/unrealized gains (losses) on investments   1,439       (2,123 )   Net increase in net assets resulting from operations   $ 4,280     $ 109   Net investment income after income taxes per common share Basic $ 0.16 $ 0.13 Diluted     0.16       0.13   Net increase in net assets resulting from operations per common share Basic $ 0.25 $ 0.01 Diluted     0.24       0.01   Dividends declared per share   $ 0.17     $ 0.15   Weighted average common shares outstanding Basic 17,400,233 17,575,877 Diluted     17,548,036       17,714,766    

MEDALLION FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

  (Dollars in thousands, except per share data)   March 31, 2011   December 31, 2010 Assets     Medallion loans, at fair value $ 310,499 $ 323,126 Commercial loans, at fair value 74,406 76,866 Investment in Medallion Bank and other controlled subsidiaries, at fair value 79,935 78,735 Equity investments, at fair value 4,971 4,789 Investment securities, at fair value   -     - Net investments 469,811 483,516   Cash and cash equivalents 16,316 17,303 Accrued interest receivable 1,347 1,441 Fixed assets, net 356 419 Goodwill, net 5,069 5,069 Other assets, net     43,391     42,564 Total assets   $ 536,290   $ 550,312   Liabilities Accounts payable and accrued expenses $ 5,908 $ 5,102 Accrued interest payable 765 1,913 Funds borrowed   365,308     380,532 Total liabilities     371,981     387,547   Commitments and contingencies - -       Total shareholders' equity (net assets)     164,309     162,765 Total liabilities and shareholders' equity   $ 536,290   $ 550,312   Number of common shares outstanding 17,468,973 17,400,233 Net asset value per share   $ 9.41   $ 9.35   Total managed loans $ 983,043 $ 967,690 Total managed assets     1,118,773     1,093,379



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