We, Medallion
Financial Corp. or the Company, are a
closed-end,
non-diversified
management investment company organized as a Delaware corporation. We previously elected to be treated
as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act, although, as described below, we withdrew from this election effective April 2, 2018. We are a specialty finance company that has
historically had a leading position in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. Recently, our strategic growth has been through a wholly-owned portfolio company of ours,
Medallion Bank, which originates consumer loans for the purchase of recreational vehicles, boats, motorcycles, and trailers and to finance small-scale home improvements. Since Medallion Bank acquired a consumer loan portfolio and began originating
consumer loans in 2004, it has increased its consumer loan portfolio at a compound annual growth rate of 16%, 19% if there had been no loan sales over the past two years. Since 1996, the year in which we became a public company, we have increased
our taxicab medallion loan portfolio at a compound annual growth rate of 1%, and our commercial loan portfolio at a compound annual growth rate of 4% (4% and 4% on a managed basis when combined with Medallion Bank). In January 2017, we announced our
plans to transform our overall strategy. We are transitioning away from medallion lending and placing our strategic focus on our growing consumer finance portfolio. Total assets under our management and the management of our unconsolidated
wholly-owned subsidiaries, which includes our managed net investment portfolio, as well as assets serviced for third party investors, were $1,507,000,000 as of March 31, 2018, and $1,593,000,000 and $1,629,000,000 as of December 31, 2017
and March 31, 2017, and have grown at a compound annual growth rate of 10% from $215,000,000 at the end of 1996. Since our initial public offering in 1996, we have paid/declared distributions in excess of $263,060,000 or $14.66 per share.
We conduct our business through various wholly-owned investment company subsidiaries including:
We formed a wholly-owned portfolio company, Medallion Servicing Corporation, or MSC, to provide loan services to Medallion Bank, also a
portfolio company wholly-owned by us. We have assigned all of our loan servicing rights for Medallion Bank, which consists of servicing taxi medallion loans originated by Medallion Bank, to MSC, which bills and collects the related service fee
income from Medallion Bank, and is allocated and charged by us for MSC’s share of these servicing costs.
In addition, we conduct
business through a wholly-owned portfolio company, Medallion Bank, a bank regulated by the FDIC and the Utah Department of Financial Institutions which originates consumer loans, raises deposits, and conducts other banking activities. Medallion Bank
generally provides us with our lowest cost of funds which it raises through bank certificates of deposit. To take advantage of this low cost of funds, historically we have referred a portion of our taxicab medallion loans to Medallion Bank, which
then originated these loans, which then were serviced by MSC. As a
non-investment
company, as of March 31, 2018, Medallion Bank was not consolidated with the Company, which is an investment company under
the 1940 Act. Following our withdrawal of our election to be treated as a BDC under the 1940 Act, as discussed below, we would be permitted to consolidate Medallion Bank with the Company.
Our diversified investments in other controlled subsidiaries are comprised of Medallion Fine Art, Inc., Medallion Motorsports, LLC, and LAX
Group, LLC. In addition, we made both marketable and nonmarketable equity investments.
The financial information is divided into two sections. The first section, Item 1, includes our unaudited consolidated financial
statements including related footnotes. The second section, Item 2, consists of Management’s Discussion and Analysis of Financial Condition and Results of Operations for the quarter ended March 31, 2018.
Our consolidated balance sheet as of March 31, 2018, and the related consolidated statements of operations, changes in net assets, and
cash flows for the quarters ended March 31, 2018 and 2017 included in Item 1 have been prepared by us, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in
financial
statements prepared in accordance with accounting principles generally accepted in the US have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the
accompanying consolidated financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly our consolidated financial position and results of operations. The results of operations for the quarters
ended March 31, 2018 and 2017, or for any other interim period, may not be indicative of future performance. These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report
on Form
10-K
for the year ended December 31, 2017.
The accompanying notes should be read in conjunction with these consolidated financial statements.
The accompanying notes should be read in conjunction
with these consolidated financial statements.
The accompanying notes should be read in conjunction with these consolidated financial statements.
The accompanying notes should be read in conjunction with these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
(1) ORGANIZATION
OF MEDALLION FINANCIAL CORP. AND ITS SUBSIDIARIES
Medallion Financial Corp. (the Company), is a
closed-end
management investment company organized as a Delaware corporation. The Company had elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as
amended (the 1940 Act), but as discussed below, has withdrawn such election effective April 2, 2018. The Company conducts its business through various wholly-owned subsidiaries including its primary operating company, Medallion Funding LLC
(MFC), a Small Business Investment Company (SBIC) which originates and services taxicab medallion and commercial loans.
A wholly-owned
portfolio investment, Medallion Bank, a Federal Deposit Insurance Corporation (FDIC) insured industrial bank, originates consumer loans, raises deposits, and conducts other banking activities (see Note 4). Medallion Bank is subject to competition
from other financial institutions and to the regulations of certain federal and state agencies, and undergoes examinations by those agencies. Medallion Bank is not an investment company, and therefore, as of March 31, 2018 was not consolidated
with the Company, but instead is treated as a portfolio investment. It was initially formed for the primary purpose of originating commercial loans in three categories: 1) loans to finance the purchase of taxicab medallions, 2) asset-based
commercial loans, and 3) SBA 7(a) loans. The loans are marketed and serviced by Medallion Bank’s affiliates who have extensive prior experience in these asset groups. Subsequent to its formation, Medallion Bank began originating consumer loans
to finance the purchases of RVs, boats, and other related items, and to finance small scale home improvements.
The Company formed a
wholly-owned portfolio company, Medallion Servicing Corporation (MSC), to provide loan services to Medallion Bank, also a portfolio company wholly-owned by the Company. The Company has assigned all of its loan servicing rights for Medallion Bank,
which consists of servicing taxi medallion loans originated by Medallion Bank, to MSC, who bills and collects the related service fee income from Medallion Bank, and is allocated and charged by the Company for MSC’s share of these servicing
costs.
The Company also conducts business through Medallion Capital, Inc. (MCI), an SBIC which conducts a mezzanine financing business,
and Freshstart Venture Capital Corp. (FSVC), an SBIC which originates and services taxicab medallion and commercial loans. MFC, MCI, and FSVC, as SBICs, are regulated by the Small Business Administration (SBA). MCI and FSVC are financed in part by
the SBA.
MFC established a wholly-owned subsidiary, Taxi Medallion Loan Trust III (Trust III), for the purpose of owning medallion loans
originated by MFC or others. Trust III is a separate legal and corporate entity with its own creditors who, in any liquidation of Trust III, will be entitled to be satisfied out of Trust III’s assets prior to any value in Trust III becoming
available to Trust III’s equity holders. The assets of Trust III, aggregating $77,649,000 at March 31, 2018, are not available to pay obligations of its affiliates or any other party, and the assets of affiliates or any other party are not
available to pay obligations of Trust III. Trust III’s loans are serviced by MFC. During the 2018 first quarter, Trust III had a deficit of $22,312,000, as a result of the unrealized depreciation and losses taken on the medallion loans in Trust
III. This amount exceeded our maximum exposure to Trust III, which is solely due to a limited guarantee by MFC of $6,124,000, by $16,188,000. Due to technical consolidation accounting rules, we are required to record these losses, even though we are
under no obligation to cover them financially.
The Company established a wholly-owned subsidiary, Medallion Financing Trust I (Fin Trust)
for the purpose of issuing unsecured preferred securities to investors. Fin Trust is a separate legal and corporate entity with its own creditors who, in any liquidation of Fin Trust, will be entitled to be satisfied out of Fin Trust’s assets
prior to any value in Fin Trust becoming available to Fin Trust’s equity holders. The assets of Fin Trust, aggregating $36,144,000 at March 31, 2018, are not available to pay obligations of its affiliates or any other party, and the assets
of affiliates or any other party are not available to pay obligations of Fin Trust.
MFC through several wholly-owned subsidiaries
(together, Medallion Chicago), purchased $8,689,000 of City of Chicago taxicab medallions out of foreclosure, which are leased to fleet operators while being held for sale. The 159 medallions are carried at a fair value of $5,535,000 on the
consolidated balance sheet at March 31, 2018, compared to $7,450,000 and $9,510,000 at December 31, 2017 and March 31, 2017, and are considered
non-qualifying
assets under the 1940 Act.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The
preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates that affect the amounts reported in the consolidated financial statements and the
accompanying notes. Accounting estimates and assumptions are those that management considers to be the most critical to an understanding of the consolidated financial statements because they inherently involve significant judgments and
uncertainties. All of
Page 9 of 89
these estimates reflect management’s best judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated
financial statements. If such conditions change, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of loans and other receivables, investments other than securities, loans held for sale,
and investments, among other effects.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, except for Medallion Bank and
other portfolio investments. All significant intercompany transactions, balances, and profits have been eliminated in consolidation. As a
non-investment
company, Medallion Bank is not consolidated with the
Company, which is an investment company under the 1940 Act. See Note 4 for the presentation of financial information for Medallion Bank and other controlled subsidiaries. The Company’s shareholders authorized the Company’s Board of
Directors on March 7, 2018 to withdraw its election to be regulated as a BDC under the 1940 Act, and the Company withdrew such election effective April 2, 2018. Historically, the composition of the Company’s assets caused it to meet
the definition of an “investment company,” and the Company made a corresponding election to be treated as a BDC. The Company has de-elected BDC status, and now has to operate so as to fall outside the definition of an “investment
company” or within an applicable exception. The Company expects to fall within the exception from the definition of an “investment company” provided under Section 3(c)(6) of the 1940 Act as a company primarily engaged, directly
or through majority-owned subsidiaries, in the business of, among other things, (i) banking, (ii) purchasing and otherwise acquiring notes, drafts, acceptances, open accounts receivable, and other obligations representing part or all of the
sales price of merchandise, insurance and services, and (iii) making loans to manufacturers, wholesalers, and retailers of, and to prospective purchasers of, specified merchandise, insurance, and services. The Company is required to monitor its
continued compliance with this exception. Commencing with the 2018 second quarter, the Company will consolidate the financial statements of Medallion Bank and controlled or majority-owned portfolio investments together with those of the Company.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents. Cash
balances are generally held in accounts at large national or regional banking organizations in amounts that exceed the federally insured limits.
Fair Value of Assets and Liabilities
The Company follows FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, (FASB ASC 820), which defines
fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as an exit price (i.e. a price that would be received to sell, as opposed to acquire, an asset or
transfer a liability), and emphasizes that fair value is a market-based measurement. It establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent external sources and the
reporting entity’s own assumptions. Further, it specifies that fair value measurement should consider adjustment for risk, such as the risk inherent in the valuation technique or its inputs. See also Notes 2, 13, and 14 to the consolidated
financial statements.
Investment Valuation
The Company’s loans, net of participations and any unearned discount, are considered investment securities under the 1940 Act and are
recorded at fair value. As part of the fair value methodology, loans are valued at cost adjusted for any unrealized appreciation (depreciation). Since no ready market exists for these loans, the fair value is determined in good faith by the Board of
Directors. In determining the fair value, the Board of Directors considers factors such as the financial condition of the borrower, the adequacy of the collateral, individual credit risks, cash flows of the borrower, market conditions for loans
(e.g. values used by other lenders and any active bid/ask market), historical loss experience, and the relationships between current and projected market rates and portfolio rates of interest and maturities. Investments other than securities, which
represent collateral received from defaulted borrowers, are valued similarly.
Equity investments (common stock and stock warrants,
including certain controlled subsidiary portfolio investments) and investment securities (US Treasuries and mortgage backed bonds), in total representing 58% and 51% of the investment portfolio at March 31, 2018 and December 31, 2017, are
recorded at fair value, represented as cost, plus or minus unrealized appreciation or depreciation. The fair value of investments that have no ready market are determined in good faith by the Board of Directors, based upon the financial condition
and operating performance of the underlying investee companies as well as general market trends for businesses in the same industry. Included in equity investments were marketable securities of $0 at March 31, 2018 and December 31, 2017,
and
non-marketable
securities of $9,458,000 and $9,521,000 in the comparable periods. The $331,169,000 and $302,147,000 related to portfolio investments in controlled subsidiaries at March 31, 2018 and
December 31, 2017 were all
non-marketable
in each period. Because of the inherent uncertainty of valuations, the Board of Directors’ estimates of the values of the investments may differ
significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.
The Company’s investment in Medallion Bank, as a wholly owned portfolio investment, is also subject to quarterly assessments of fair
value. The Company conducts a thorough valuation analysis as described previously, and also receives an opinion regarding the valuation from an independent third party to assist the Board of Directors in its determination of the fair value of
Medallion Bank on at least an annual basis. The Company’s analysis includes factors such as various regulatory restrictions that were established at Medallion Bank’s inception, by the FDIC and State of Utah, and also by additional
regulatory restrictions, such as the
Page 10 of 89
prior moratorium imposed by the Dodd-Frank Act on the acquisition of control of an industrial bank by a “commercial firm” (a company whose gross revenues are primarily derived from
non-financial
activities) which expired in July 2013 and the lack of any new charter issuances since the moratorium’s expiration. Because of these restrictions and other factors, the Company’s Board of
Directors had previously determined that Medallion Bank had little value beyond its recorded book value. As a result of this valuation process, the Company had previously used Medallion Bank’s actual results of operations as the best estimate
of changes in fair value, and recorded the results as a component of unrealized appreciation (depreciation) on investments. In the 2015 second quarter, the Company first became aware of external interest in Medallion Bank and its portfolio assets at
values in excess of their book value. Expression of interest in Medallion Bank from both investment bankers and interested parties has continued to the present time. The Company incorporated these new factors in the Medallion Bank’s fair value
analysis and the Board of Directors determined that Medallion Bank had a fair value in excess of book value. In addition, in the 2016 third quarter there was a court ruling involving a marketplace lender that the Company believes heightens the
interest of marketplace lenders to acquire or merge with Utah industrial banks. The Company also engaged a valuation specialist to assist the Board of Directors in their determination of Medallion Bank’s fair value, and this appreciation of
$15,500,000 was thereby recorded in 2015, and additional appreciation of $128,918,000 was recorded in 2016, $7,849,000 was recorded in 2017, and $39,826,000 was recorded in 2018. See Note 4 for additional information about Medallion Bank.
A majority of the Company’s investments consist of long-term loans to persons defined by SBA regulations as small business concerns.
Approximately 27% and 34% of the Company’s investment portfolio at March 31, 2018 and December 31, 2017 had arisen in connection with the financing of taxicab medallions, taxicabs, and related assets, of which 76% and 73% were in New
York City at March 31, 2018 and December 31, 2017. These loans are secured by the medallions, taxicabs, and related assets, and are personally guaranteed by the borrowers, or in the case of corporations, are generally guaranteed personally
by the owners. A portion of the Company’s portfolio (15% at March 31, 2018 and December 31, 2017) represents loans to various commercial enterprises in a wide variety of industries, including manufacturing, retail trade, information,
recreation, and various other industries. Approximately 41% of these loans are made primarily in the Midwest and 4% in the metropolitan New York City area, with the balance widely scattered across the United States. Investments in controlled
unconsolidated subsidiaries, equity investments, and investment securities were 56%, 2%, and 0% at March 31, 2018, and were 49%, 2%, and 0% at December 31, 2017.
On a managed basis, which includes the investments of Medallion Bank after eliminating the Company’s investment in Medallion Bank,
medallion loans were 23% and 28% at March 31, 2018 and December 31, 2017 (85% and 81% in New York City), commercial loans were 7%, and 52% and 49% were consumer loans in all 50 states collateralized by recreational vehicles, boats,
motorcycles, trailers, and home improvements. Investment securities were 3% at March 31, 2018 and December 31, 2017, and equity investments (including investments in controlled subsidiaries) were 15% and 13%.
Investment Transactions and Income Recognition
Loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield of the related loans. At
March 31, 2018 and December 31, 2017, net loan origination costs were $86,000 and $90,000. Net accretion to income for the three months ended March 31, 2018 and 2017 was $13,000 and $20,000.
Investment securities are purchased from
time-to-time
in the
open market at prices that are greater or lesser than the par value of the investment. The resulting premium or discount is deferred and recognized as an adjustment to the yield of the related investment. At March 31, 2018 and December 31,
2017, there were no premiums or discounts on investment securities, and their related income accretion or amortization was immaterial for 2018 and 2017.
Interest income is recorded on the accrual basis. Taxicab medallion and commercial loans are placed on nonaccrual status, and all uncollected
accrued interest is reversed, when there is doubt as to the collectability of interest or principal, or if loans are 90 days or more past due, unless management has determined that they are both well-secured and in the process of collection.
Interest income on nonaccrual loans is generally recognized when cash is received, unless a determination has been made to apply all cash receipts to principal.
The following table presents total nonaccrual loans and foregone interest, noting the decline in total nonaccrual loans is primarily
concentrated in the taxi medallion portfolio as a result of increased charge-offs. The fluctuations in nonaccrual interest foregone is due to past due loans and market conditions.
Page 11 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
March 31, 2017
|
|
|
Total nonaccrual loans
|
|
$
|
77,998
|
|
|
$
|
98,494
|
|
|
$
|
104,881
|
|
|
Interest foregone quarter to date
|
|
|
1,642
|
|
|
|
1,125
|
|
|
|
1,529
|
|
|
Amount of foregone interest applied to principal in the quarter
|
|
|
792
|
|
|
|
264
|
|
|
|
1,198
|
|
|
Interest foregone life to date
|
|
|
14,127
|
|
|
|
12,485
|
|
|
|
13,189
|
|
|
Amount of foregone interest applied to principal life to date
|
|
|
4,287
|
|
|
|
3,495
|
|
|
|
9,033
|
|
|
Percentage of nonaccrual loans to gross loan portfolio
|
|
|
28
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
Loan Sales and Servicing Fee Receivable
The Company accounts for its sales of loans in accordance with FASB Accounting Standards Codification Topic 860, Transfers and Servicing (FASB
ASC 860) which provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. In accordance with FASB ASC 860, the Company has elected the fair value measurement method for its
servicing assets and liabilities. The principal portion of loans serviced for others by the Company and its affiliates was $335,084,000 and $338,867,000 at March 31, 2018 and December 31, 2017, and included $308,346,000 and $311,988,000 of
loans serviced for Medallion Bank. The Company has evaluated the servicing aspect of its business in accordance with FASB ASC 860, most of which relates to servicing assets held by Medallion Bank, and determined that no material servicing asset or
liability exists as of March 31, 2018 and December 31, 2017. The Company has assigned its servicing rights to the Medallion Bank portfolio to MSC, a wholly-owned unconsolidated portfolio investment. The costs of servicing are allocated to
MSC by the Company, and the servicing fee income is billed to and collected from Medallion Bank by MSC.
Unrealized Appreciation
(Depreciation) and Realized Gains (Losses) on Investments
Unrealized appreciation (depreciation) on investments is the amount by which
the fair value estimated by the Company is greater (less) than the cost basis of the investment portfolio. Realized gains or losses on investments are generated through sales of investments, foreclosure on specific collateral, and writeoffs of loans
or assets acquired in satisfaction of loans, net of recoveries. Unrealized appreciation on investments was $172,177,000, $139,700,000, and $122,595,000 as of March 31, 2018, December 31, 2017, and March 31, 2017. The Company’s
investment in Medallion Bank, a wholly owned portfolio investment, is also subject to quarterly assessments of fair value. The Company conducts a thorough valuation analysis as described previously, and determines whether any factors give rise to a
valuation different than recorded book value, including various regulatory restrictions that were established at Medallion Bank’s inception, by the FDIC and State of Utah, and also by additional marketplace restrictions, such as the ability to
transfer industrial bank charters. Because of these restrictions and other factors, the Company’s Board of Directors had previously determined that Medallion Bank had little value beyond its recorded book value. As a result of this valuation
process, the Company had previously used Medallion Bank’s actual results of operations as the best estimate of changes in fair value, and recorded the results as a component of unrealized appreciation (depreciation) on investments. In the
second quarter of 2015, the Company became first aware of external interest in Medallion Bank and its portfolio assets at values in excess of their book value. Expression of interest in Medallion Bank from both investment bankers and interested
parties has continued to the present time. The Company incorporated these new factors in the Medallion Bank’s fair value analysis and the Board of Directors determined that Medallion Bank had a fair value in excess of book value. In addition,
in the 2016 third quarter there was a court ruling involving a marketplace lender that the Company believes heightens the interest of marketplace lenders to acquire or merge with Utah industrial banks. The Company also engaged a valuation specialist
to assist the Board of Directors in their determination of Medallion Bank’s fair value, and this appreciation of $15,500,000 was thereby recorded in 2015, and additional appreciation of $128,918,000 was recorded in 2016, $7,849,000 was recorded
in 2017, and $39,826,000 was recorded in 2018. See Note 4 for additional information about Medallion Bank.
The following tables set forth
the
pre-tax
changes in the Company’s unrealized appreciation (depreciation) on investments for the 2018 and 2017 quarters shown below.
Page 12 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Medallion
Loans
|
|
|
Commercial
Loans
|
|
|
Investments in
Subsidiaries
|
|
|
Equity
Investments
|
|
|
Investments
Other
Than Securities
|
|
|
Total
|
|
|
Balance December 31, 2017
|
|
($
|
20,338
|
)
|
|
($
|
513
|
)
|
|
$
|
158,920
|
|
|
$
|
3,121
|
|
|
($
|
1,490
|
)
|
|
$
|
139,700
|
|
|
Net change in unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Appreciation on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
38,795
|
|
|
|
(998
|
)
|
|
|
—
|
|
|
|
37,797
|
|
|
Depreciation on investments
|
|
|
(38,170
|
)
|
|
|
18
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,915
|
)
|
|
|
(40,067
|
)
|
|
Reversal of unrealized appreciation (depreciation) related to realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Losses on investments
|
|
|
34,747
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2018
|
|
($
|
23,761
|
)
|
|
($
|
495
|
)
|
|
$
|
197,715
|
|
|
$
|
2,123
|
|
|
($
|
3,405
|
)
|
|
$
|
172,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
Medallion
Loans
|
|
|
Commercial
Loans
|
|
|
Investments in
Subsidiaries
|
|
|
Equity
Investments
|
|
|
Investments
Other
Than Securities
|
|
|
Total
|
|
|
Balance December 31, 2016
|
|
($
|
28,523
|
)
|
|
($
|
1,378
|
)
|
|
$
|
152,750
|
|
|
$
|
3,934
|
|
|
$
|
584
|
|
|
$
|
127,367
|
|
|
Net change in unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Appreciation on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
3,751
|
|
|
|
1,261
|
|
|
|
—
|
|
|
|
5,012
|
|
|
Depreciation on investments
|
|
|
(8,670
|
)
|
|
|
(332
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,002
|
)
|
|
Reversal of unrealized appreciation (depreciation) related to realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,093
|
)
|
|
|
—
|
|
|
|
(2,093
|
)
|
|
Losses on investments
|
|
|
825
|
|
|
|
—
|
|
|
|
—
|
|
|
|
486
|
|
|
|
—
|
|
|
|
1,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2017
|
|
($
|
36,368
|
)
|
|
($
|
1,710
|
)
|
|
$
|
156,501
|
|
|
$
|
3,588
|
|
|
$
|
584
|
|
|
$
|
122,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below summarizes the
pre-tax
components of unrealized and
realized gains and losses in the investment portfolio for the quarters ended March 31, 2018 and 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Net change in unrealized appreciation (depreciation) on investments
|
|
|
|
|
|
|
|
|
|
Unrealized appreciation
|
|
($
|
998
|
)
|
|
$
|
1,258
|
|
|
Unrealized depreciation
|
|
|
(38,152
|
)
|
|
|
(9,002
|
)
|
|
Net unrealized appreciation on investments in Medallion Bank and other controlled
subsidiaries
|
|
|
29,115
|
|
|
|
8,124
|
|
|
Realized gains
|
|
|
—
|
|
|
|
(2,090
|
)
|
|
Realized losses
|
|
|
34,747
|
|
|
|
1,311
|
|
|
Net unrealized losses on investments other than securities and other assets
|
|
|
(1,915
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
22,797
|
|
|
$
|
(399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gains (losses) on investments
|
|
|
|
|
|
|
|
|
|
Realized gains
|
|
$
|
—
|
|
|
$
|
2,090
|
|
|
Realized losses
|
|
|
(34,747
|
)
|
|
|
(1,311
|
)
|
|
Other gains
|
|
|
—
|
|
|
|
44
|
|
|
Direct recoveries (charge offs)
|
|
|
2
|
|
|
|
22
|
|
|
Realized gains on investments other than securities and other assets
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Page 13 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Total
|
|
($
|
34,745
|
)
|
|
$
|
845
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides additional information on attributes of the nonperforming loan portfolio as of
March 31, 2018, December 31, 2017, and March 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Recorded
Investment
(1)
(2)
|
|
|
Unpaid Principal
Balance
|
|
|
Average Recorded
Investment
|
|
|
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medallion
(3)
|
|
$
|
59,394
|
|
|
$
|
62,519
|
|
|
$
|
142,364
|
|
|
Commercial
(3)
|
|
|
18,604
|
|
|
|
20,880
|
|
|
|
19,151
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medallion
(3)
|
|
$
|
79,871
|
|
|
$
|
82,612
|
|
|
$
|
128,671
|
|
|
Commercial
(3)
|
|
|
18,623
|
|
|
|
20,491
|
|
|
|
18,792
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medallion
(3)
|
|
$
|
94,683
|
|
|
$
|
96,321
|
|
|
$
|
105,772
|
|
|
Commercial
(3)
|
|
|
10,198
|
|
|
|
17,594
|
|
|
|
10,308
|
|
|
(1)
|
As of March 31, 2018, December 31, 2017, and March 31, 2017, $24,256, $20,851, and $38,079 of unrealized depreciation had been recorded as a valuation allowance on these loans.
|
|
(2)
|
Interest income of $85 and $442 was recognized on loans for the quarters ended March 31, 2018 and 2017.
|
|
(3)
|
Included in the unpaid principal balance is unearned
paid-in-kind
interest on nonaccrual loans of $5,401, $4,609, and $9,034, which is
included in the nonaccrual disclosures in the section titled “Investment Transactions and Income Recognition” on page 11 as of March 31, 2018, December 31, 2017, and March 31, 2017.
|
Page 14 of 89
The following tables show the aging of medallion and commercial loans as of March 31, 2018
and December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
Days Past Due
|
|
|
|
|
|
|
|
|
Recorded
Investment >
90 Days and
|
|
|
(Dollars in thousands)
|
|
31-60
|
|
|
61-90
|
|
|
91 +
|
|
|
Total
|
|
|
Current
|
|
|
Total
|
|
|
Accruing
|
|
|
Medallion loans
|
|
$
|
13,147
|
|
|
$
|
12,278
|
|
|
$
|
38,354
|
|
|
$
|
63,779
|
|
|
$
|
120,950
|
|
|
$
|
184,729
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured mezzanine
|
|
|
1,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000
|
|
|
|
91,782
|
|
|
|
92,782
|
|
|
|
—
|
|
|
Other secured commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
730
|
|
|
|
730
|
|
|
|
704
|
|
|
|
1,434
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial loans
|
|
|
1,000
|
|
|
|
—
|
|
|
|
730
|
|
|
|
1,730
|
|
|
|
92,486
|
|
|
|
94,216
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14,147
|
|
|
$
|
12,278
|
|
|
$
|
39,084
|
|
|
$
|
65,509
|
|
|
$
|
213,436
|
|
|
$
|
278,945
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
Days Past Due
|
|
|
|
|
|
|
|
|
|
|
|
Recorded
Investment >
90 Days and
|
|
|
(Dollars in thousands)
|
|
31-60
|
|
|
61-90
|
|
|
91 +
|
|
|
Total
|
|
|
Current
|
|
|
Total
|
|
|
Accruing
|
|
|
Medallion loans
|
|
$
|
16,049
|
|
|
$
|
12,387
|
|
|
$
|
59,701
|
|
|
$
|
88,137
|
|
|
$
|
140,279
|
|
|
$
|
228,416
|
|
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured mezzanine
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
88,334
|
|
|
|
88,334
|
|
|
|
—
|
|
|
Other secured commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
749
|
|
|
|
749
|
|
|
|
1,728
|
|
|
|
2,477
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial loans
|
|
|
—
|
|
|
|
—
|
|
|
|
749
|
|
|
|
749
|
|
|
|
90,062
|
|
|
|
90,811
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
16,049
|
|
|
$
|
12,387
|
|
|
$
|
60,450
|
|
|
$
|
88,886
|
|
|
$
|
230,341
|
|
|
$
|
319,227
|
|
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 15 of 89
A third party finance company sold various participations in asset based loans to Medallion
Business Credit and Medallion Bank. In April 2013 the aggregate balance of the participations was approximately $13.8 million, $12.9 million of which were held by Medallion Bank. That amount was divided between seven separate borrowers
operating in a variety of industries. In April 2013, the third party finance company became the subject of an involuntary bankruptcy petition filed by its bank lenders. Among other things, the bank lenders alleged that the third party finance
company fraudulently misrepresented its borrowing availability under its credit facility with the bank lenders and are seeking the third party finance company’s liquidation. In May 2013, the bankruptcy court presiding over the third party
finance company’s case entered an order converting the involuntary chapter 7 case to a chapter 11 case. The Company and Medallion Bank have placed these loans on nonaccrual, and reversed interest income. In addition, the Company and Medallion
Bank have established valuation allowances against the outstanding balances. On May 31, 2013, the Company and Medallion Bank commenced an adverse proceeding against the third party finance company and the bank lenders seeking declaratory
judgment that the Company’s and Medallion Bank’s loan participations are true participations and not subject to the bankruptcy estate or to the bank lender’s security interest in the third party finance company’s assets. The
third party finance company and bank lenders are contesting the Company’s and Medallion Bank’s position. In April 2014, the Company and Medallion Bank received a decision from the court granting summary judgment in their favor with respect
to the issue of whether the Company’s and Medallion Bank’s loan participations are true participations. In March 2015, the Company and Medallion Bank received a decision from the court finding that the bank lenders generally held a first
lien on the Company’s and Medallion Bank’s loan participations subject to, among other things, defenses still pending prosecution by the parties and adjudication by the court. The Company and Medallion Bank are appealing the decision. The
remaining issues are still being litigated. Although the Company and Medallion Bank believe the claims raised by the third party finance company and the bank lenders are without merit and will vigorously defend against them, the Company and
Medallion Bank cannot at this time predict the outcome of this litigation or determine their potential exposure. At March 31, 2018, five of the seven secured borrowers had refinanced their loans in full with third parties, and the related
proceeds are held in escrow pending resolution of the bankruptcy proceedings. In September 2015, one loan was sold at a discount to a third party, and the related proceeds are held in escrow pending resolution of the bankruptcy proceeding. One loan
was charged off in September 2014. The balances related to the paid off loans have been reclassified to other assets on the consolidated balance sheet. The table below summarizes these receivables and their status with the Company and Medallion Bank
as of March 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
The Company
|
|
|
Medallion Bank
|
|
|
Total
|
|
|
Loans outstanding
|
|
$
|
258
|
|
|
$
|
1,953
|
|
|
$
|
2,211
|
|
|
Loans charged off
(1)
|
|
|
(258
|
)
|
|
|
(1,953
|
)
|
|
|
(2,211
|
)
|
|
Valuation allowance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans outstanding
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables
|
|
|
590
|
|
|
|
11,062
|
|
|
|
11,652
|
|
|
Valuation allowance
|
|
|
(251
|
)
|
|
|
(5,901
|
)
|
|
|
(6,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other receivables
|
|
|
339
|
|
|
|
5,161
|
|
|
|
5,500
|
|
|
Total net outstanding
|
|
|
339
|
|
|
|
5,161
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income foregone in 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total income foregone
|
|
$
|
74
|
|
|
$
|
108
|
|
|
$
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The income foregone on the charged off loan was $99 for the Company and $213 for Medallion Bank.
|
The Company did not enter into any troubled debt restructurings during the quarter ended March 31, 2018.
During the twelve months ended March 31, 2018, eight loans modified as troubled debt restructurings were in default and had an investment
value of $1,334,000 as of March 31, 2018, net of $1,630,000 of unrealized depreciation.
The following table shows troubled debt
restructurings which the Company entered into during the quarter ended March 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Number of Loans
|
|
|
Pre-
Modification
Investment
|
|
|
Post-
Modification
Investment
|
|
|
Medallion loans
|
|
|
35
|
|
|
$
|
23,662
|
|
|
$
|
23,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
|
2
|
|
|
|
6,547
|
|
|
|
6,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
37
|
|
|
$
|
30,209
|
|
|
$
|
30,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 16 of 89
During the twelve months ended March 31, 2017, four loans modified as troubled debt
restructurings were in default and had an investment value of $1,000,000 as of March 31, 2017, net of $987,000 of unrealized depreciation.
Fixed Assets
Fixed
assets are carried at cost less accumulated depreciation and amortization, and are depreciated on a straight-line basis over their estimated useful lives of 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the
shorter of the lease term or the estimated economic useful life of the improvement. Depreciation and amortization expense was $23,000 and $25,000 for the quarters ended March 31, 2018 and 2017.
Deferred Costs
Deferred
financing costs, included in other assets, represents costs associated with obtaining the Company’s borrowing facilities, and are amortized on a straight line basis over the lives of the related financing agreements. Amortization expense was
$223,000 and $228,000 for the quarters ended March 31, 2018 and 2017, recorded as interest expense on the Consolidated Statement of Operations. In addition, the Company capitalizes certain costs for transactions in the process of completion
(other than business combinations), including those for potential investments, and the sourcing of other financing alternatives. Upon completion or termination of the transaction, any accumulated amounts will be amortized against income over an
appropriate period, or written off. The amounts on the balance sheet for all of these purposes were $2,862,000, $3,070,000, and $3,814,000 as of March 31, 2018, December 31, 2017, and March 31, 2017.
Income Taxes
Income
taxes are accounted for using the asset and liability approach in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities reflect the impact of temporary differences between the carrying
amount of assets and liabilities and their tax basis and are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred tax assets are also recorded for net operating losses, capital losses and any tax credit
carryforwards. A valuation allowance is provided against a deferred tax asset when it is more likely than not that some or all of the deferred tax assets will not be realized. All available evidence, both positive and negative, is considered to
determine whether a valuation allowance for deferred tax assets is needed. Items considered in determining our valuation allowance include expectations of future earnings of the appropriate tax character, recent historical financial results, tax
planning strategies, the length of statutory carryforward periods and the expected timing of the reversal of temporary differences. Under ASC 740, forming a conclusion that a valuation allowance is not needed is difficult when there is negative
evidence, such as cumulative losses in recent years. The Company recognizes tax benefits of uncertain tax positions only when the position is more likely than not to be sustained assuming examination by tax authorities. The Company records
income tax related interest and penalties, if applicable, within current income tax expense.
Net Increase (Decrease) in Net Assets
Resulting from Operations per Share (EPS)
Basic earnings per share are computed by dividing net increase (decrease) in net assets
resulting from operations available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if option contracts to issue common
stock were exercised, or if restricted stock vests, and has been computed after giving consideration to the weighted average dilutive effect of the Company’s stock options and restricted stock. The Company uses the treasury stock method to
calculate diluted EPS, which is a method of recognizing the use of proceeds that could be obtained upon exercise of options and warrants, including unvested compensation expense related to the shares, in computing diluted EPS. It assumes that any
proceeds would be used to purchase common stock at the average market price during the period.
Page 17 of 89
The table below shows the calculation of basic and diluted EPS.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Net increase (decrease) in net assets resulting from operations available to common
shareholders
|
|
$
|
(14,874
|
)
|
|
$
|
1,111
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding applicable to basic EPS
|
|
|
24,154,879
|
|
|
|
23,892,942
|
|
|
Effect of dilutive stock options
|
|
|
—
|
|
|
|
—
|
|
|
Effect of restricted stock grants
|
|
|
—
|
|
|
|
52,614
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average common shares outstanding applicable to diluted EPS
|
|
|
24,154,879
|
|
|
|
23,945,556
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
(0.62
|
)
|
|
$
|
0.05
|
|
|
Diluted earnings (loss) per share
|
|
|
(0.62
|
)
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
Potentially dilutive common shares excluded from the above calculations aggregated 290,960 and 415,012 shares
as of March 31, 2018 and 2017.
Stock Compensation
The Company follows FASB Accounting Standard Codification Topic 718 (ASC 718), “Compensation – Stock Compensation”, for its
stock option and restricted stock plans, and accordingly, the Company recognizes the expense of these grants as required. Stock-based employee compensation costs pertaining to stock options is reflected in net increase (decrease) in net assets
resulting from operations for any new grants using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underlying option. Stock-based employee compensation costs pertaining to
restricted stock are reflected in net increase in net assets resulting from operations for any new grants using the grant date fair value of the shares granted, expensed over the vesting period of the underlying stock.
During the three months ended March 31, 2018 and 2017, the Company issued 97,952 and 105,138 restricted shares of stock-based
compensation awards, and no shares of other stock-based compensation awards, and recognized $152,000 and $128,000, or $0.01 and $0.01 per diluted common share for each period, of
non-cash
stock-based
compensation expense related to the grants. As of March 31, 2018, the total remaining unrecognized compensation cost related to unvested stock options and restricted stock was $654,000, which is expected to be recognized over the next 12
quarters (see Note 7).
Derivatives
The Company manages its exposure to increases in market rates of interest by periodically purchasing interest rate caps to lock in the cost of
funds of its variable-rate debt in the event of a rapid run up in interest rates. The Company entered into contracts to purchase interest rate caps on $70,000,000 of notional value of principal from various multinational banks, with termination
dates ranging to December 2018. The caps provide for payments to the Company if various LIBOR thresholds are exceeded during the cap terms. Total cap purchases were generally fully expensed when paid, including $0 and $0 for the quarters ended
March 31, 2018 and 2017, and all are carried at $0 on the balance sheet at March 31, 2018.
Reclassifications
Certain reclassifications have been made to prior year balances to conform with the current quarter’s presentation. These
reclassifications have no effect on the previously reported results of operations.
(3) CHANGES IN FINANCIAL REPORTING
On March 7, 2018, a majority of the Company’s shareholders authorized the Company’s Board of Directors to withdraw the
Company’s election to be regulated as a BDC under the 1940 Act and the Company withdrew such election effective April 2, 2018. As a result, as of such date, the Company is no longer a BDC or subject to the provisions of the 1940 Act
applicable to BDCs.
Accordingly, commencing with the second
quarter of 2018, the Company will consolidate the financial statements of Medallion Bank and other controlled or majority-owned portfolio investments together with those of the Company and will prepare its financial statements following the
provisions of Article 9 of Regulation
S-X,
as if it were a bank holding company.
Page 18 of 89
(4) INVESTMENTS IN MEDALLION BANK AND OTHER CONTROLLED SUBSIDIARIES
The following table presents information derived from Medallion Bank’s statement of comprehensive income and other valuation adjustments
on other controlled subsidiaries for the quarters ended March 31, 2018 and 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Statement of comprehensive income
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
$
|
26,880
|
|
|
$
|
26,328
|
|
|
Interest expense
|
|
|
3,615
|
|
|
|
3,107
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
23,265
|
|
|
|
23,221
|
|
|
Noninterest income
|
|
|
19
|
|
|
|
35
|
|
|
Operating expenses
|
|
|
7,158
|
|
|
|
6,050
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income before income taxes
|
|
|
16,126
|
|
|
|
17,206
|
|
|
Income tax provision (provision) benefit
|
|
|
3,321
|
|
|
|
(2,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income after income taxes
|
|
|
19,447
|
|
|
|
14,750
|
|
|
Net realized/unrealized losses of Medallion Bank
|
|
|
(28,539
|
)
|
|
|
(10,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations of Medallion Bank
|
|
|
(9,092
|
)
|
|
|
4,328
|
|
|
Unrealized appreciation (depreciation) on Medallion Bank
(1)
|
|
|
39,092
|
|
|
|
(28
|
)
|
|
Net realized/unrealized gains (losses) on controlled subsidiaries other than Medallion
Bank
|
|
|
(885
|
)
|
|
|
3,824
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations of Medallion Bank and other controlled
subsidiaries
|
|
$
|
29,115
|
|
|
$
|
8,124
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unrealized depreciation on Medallion Bank reflects the adjustment to the investment carrying amount to reflect the dividends declared to the US Treasury, and the fair value adjustments to the carrying amount of
Medallion Bank.
|
The following table presents Medallion Bank’s balance sheets and the net investment in other
controlled subsidiaries as of March 31, 2018 and December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Loans
|
|
$
|
877,610
|
|
|
$
|
864,819
|
|
|
Investment securities, at fair value
|
|
|
41,294
|
|
|
|
43,478
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investments
|
|
|
918,904
|
|
|
|
908,297
|
|
|
Cash
|
|
|
27,948
|
|
|
|
110,233
|
|
|
Other assets, net
|
|
|
61,151
|
|
|
|
58,827
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,008,003
|
|
|
$
|
1,077,357
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
$
|
4,519
|
|
|
$
|
3,836
|
|
|
Due to affiliates
|
|
|
491
|
|
|
|
1,055
|
|
|
Deposits and other borrowings, including accrued interest
payable
|
|
|
848,589
|
|
|
|
908,236
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
853,599
|
|
|
|
913,127
|
|
|
Medallion Bank equity
(1)
|
|
|
154,404
|
|
|
|
164,230
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,008,003
|
|
|
$
|
1,077,357
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in other controlled subsidiaries
|
|
$
|
11,026
|
|
|
$
|
11,449
|
|
|
Total investment in Medallion Bank and other controlled subsidiaries
(2)
|
|
$
|
331,169
|
|
|
$
|
302,147
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $26,303 of preferred stock issued to the US Treasury under the Small Business Lending Fund Program (SBLF).
|
|
(2)
|
Includes $192,093 and $152,267 of unrealized appreciation on Medallion Bank, in excess of Medallion Bank’s book value as of March 31, 2018 and December 31, 2017.
|
Page 19 of 89
The following paragraphs summarize the accounting and reporting policies of Medallion Bank, and
provide additional information relating to the tables presented above.
Investment securities are purchased from
time-to-time
in the open market at prices that are greater or lesser than the par value of the investment. The resulting premium or discount is deferred and recognized on a
level yield basis as an adjustment to the yield of the related investment. At March 31, 2018 and December 31, 2017, the net premium on investment securities totaled $244,000 and $265,000, and $21,000 and $20,000 was amortized into interest
income for the quarters ended March 31, 2018 and 2017.
Loan origination fees and certain direct origination costs are deferred and
recognized as an adjustment to the yield of the related loans. At March 31, 2018 and December 31, 2017, net loan origination costs were $11,597,000 and $11,097,000. Net amortization expense for the quarters ended March 31, 2018
and 2017 was $865,000 and $829,000.
Medallion Bank’s policies regarding nonaccrual of medallion and commercial loans are similar to
those of the Company. The consumer portfolio has different characteristics compared to commercial loans, typified by a larger number of lower dollar loans that have similar characteristics. These loans are placed on nonaccrual, when they become 90
days past due, or earlier if they enter bankruptcy, and are charged off in their entirety when deemed uncollectible, or when they become 120 days past due, whichever occurs first, at which time appropriate collection and recovery efforts against
both the borrower and the underlying collateral are initiated. At March 31, 2018, $4,530,000 or less than 1% of consumer loans, no commercial loans and $31,390,000 or 15% of medallion loans were on nonaccrual, compared to $5,366,000 or 1% of
consumer loans, no commercial loans, and $27,332,000 or 12% of medallion loans on nonaccrual at December 31, 2017, and $3,179,000 or less than 1% of consumer loans, no commercial loans and $37,018,000 or 14% of medallion loans were on
nonaccrual at March 31, 2017. The amount of interest income on nonaccrual loans that would have been recognized if the loans had been paying in accordance with their original terms was $1,118,000 ($1,005,000 of which had been applied to
principal), $1,487,000 ($1,221,000 of which had been applied to principal), and $1,136,000 ($805,000 of which had been applied to principal) as of March 31, 2018, December 31, 2017, and March 31, 2017. See also the paragraph and table
on page 56 following the delinquency table for a discussion of other past due amounts.
Medallion Bank’s loan and investment
portfolios are assessed for collectability on a monthly basis, and a loan loss allowance is established for any realizability concerns on specific investments, and general reserves have also been established for any unknown factors. Adjustments to
the value of this portfolio are based on the Company’s own historical loan loss data developed since 2004, adjusted for changes in delinquency trends and other factors as described previously in Note 2.
Medallion Bank raises deposits to fund loan originations. The deposits were raised through the use of investment brokerage firms who package
deposits qualifying for FDIC insurance into pools that are sold to Medallion Bank. The rates paid on the deposits are highly competitive with market rates paid by other financial institutions, and include a brokerage fee depending on the maturity of
the deposit, which averages less than 0.15%, and which is capitalized and amortized to interest expense over the life of the respective pool. The total amount capitalized at March 31, 2018 and December 31, 2017 was $1,982,000 and
$1,941,000, and $305,000 and $330,000 was amortized to interest expense during the quarters ended March 31, 2018 and 2017. Interest on the deposits is accrued daily and paid monthly, quarterly, semiannually, or at maturity.
The outstanding balances of fixed rate borrowings were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due for the Fiscal Year Ending March 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
Interest
|
|
|
(Dollars
in
thousands)
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
|
2018
|
|
|
2017
|
|
|
Rate
(1)
|
|
|
Deposits and other borrowings
|
|
$
|
330,999
|
|
|
$
|
251,824
|
|
|
$
|
108,800
|
|
|
$
|
97,792
|
|
|
$
|
57,811
|
|
|
$
|
—
|
|
|
$
|
847,226
|
|
|
$
|
906,748
|
|
|
|
1.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Weighted average contractual rate as of March 31, 2018.
|
Medallion Bank is subject to
various regulatory capital requirements administered by the FDIC and State of Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional disciplinary actions by
regulators that, if undertaken, could have a direct material effect on Medallion Bank’s and the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Medallion Bank
must meet specific capital guidelines that involve quantitative measures of Medallion Bank’s assets, liabilities, and certain
off-balance
sheet items as calculated under regulatory accounting practices.
Medallion Bank’s capital amounts and classification are also subject to qualitative judgments by Medallion Bank regulators about components, risk weightings, and other factors.
FDIC-insured banks, including Medallion Bank, are subject to certain federal laws, which impose various legal limitations on the extent to
which banks may finance or otherwise supply funds to certain of their affiliates. In particular, Medallion Bank is subject to certain restrictions on any extensions of credit to, or other covered transactions, such as certain purchases of assets,
with the Company or its affiliates.
Quantitative measures established by regulation to ensure capital adequacy require Medallion Bank to
maintain minimum amounts and ratios as defined in the regulations (set forth in the table below). Additionally, as conditions of granting Medallion Bank’s application for federal deposit insurance, the FDIC ordered that the leverage capital
ratio (Tier 1 capital to average assets) be
Page 20 of 89
not less than 15%, and that an adequate allowance for loan losses be maintained. As a result, to facilitate maintenance of the capital ratio requirement and to provide the necessary capital for
continued growth, the Company periodically makes capital contributions to Medallion Bank. There were no capital contributions to or dividends received from Medallion Bank during the 2018 and 2017 first quarters.
On February 27, 2009 and December 22, 2009, Medallion Bank issued, and the US Treasury purchased under the TARP Capital Purchase
Program (the CPP) Medallion Bank’s fixed rate
non-cumulative
Perpetual Preferred Stock, Series A, B, C, and D for an aggregate purchase price of $21,498,000 in cash. On July 21, 2011, Medallion Bank
issued, and the US Treasury purchased 26,303 shares of Senior
Non-Cumulative
Perpetual Preferred Stock, Series E (Series E) for an aggregate purchase price of $26,303,000 under the Small Business Lending Fund
Program (SBLF). The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified smaller banks at favorable rates. In connection with the issuance of the Series E, the Bank exited the CPP by redeeming
the Series A, B, C, and D; and received approximately $4,000,000, net of dividends due on the repaid securities. The Bank pays a dividend rate of 9% on the Series E.
The following table represents Medallion Bank’s actual capital amounts and related ratios as of March 31, 2018 and December 31,
2017, compared to required regulatory minimum capital ratios and the ratios required to be considered well capitalized. As of March 31, 2018, Medallion Bank meets all capital adequacy requirements to which it is subject, and is
well-capitalized.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
|
Minimum
|
|
|
Well-capitalized
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
Common equity tier 1 capital
|
|
|
—
|
|
|
|
—
|
|
|
$
|
125,796
|
|
|
$
|
137,494
|
|
|
Tier 1 capital
|
|
|
—
|
|
|
|
—
|
|
|
|
152,099
|
|
|
|
163,797
|
|
|
Total capital
|
|
|
—
|
|
|
|
—
|
|
|
|
165,213
|
|
|
|
176,876
|
|
|
Average assets
|
|
|
—
|
|
|
|
—
|
|
|
|
1,020,946
|
|
|
|
1,127,087
|
|
|
Risk-weighted assets
|
|
|
—
|
|
|
|
—
|
|
|
|
990,711
|
|
|
|
995,145
|
|
|
Leverage ratio
(1)
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
14.9
|
%
|
|
|
14.5
|
%
|
|
Common equity tier 1 capital
ratio
(2)
|
|
|
5
|
|
|
|
7
|
|
|
|
12.7
|
|
|
|
13.8
|
|
|
Tier 1 capital ratio
(3)
|
|
|
6
|
|
|
|
8
|
|
|
|
15.4
|
|
|
|
16.5
|
|
|
Total capital ratio
(3)
|
|
|
8
|
|
|
|
10
|
|
|
|
16.7
|
|
|
|
17.8
|
|
|
(1)
|
Calculated by dividing Tier 1 capital by average assets.
|
|
(2)
|
Calculated by subtracting preferred stock or
non-controlling
interests from Tier 1 capital and dividing by risk-weighted assets.
|
|
(3)
|
Calculated by dividing Tier 1 or total capital by risk-weighted assets.
|
(5) FUNDS BORROWED
The outstanding balances of funds borrowed were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due for the Fiscal Year Ending March 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
Interest
|
|
|
(Dollars
in
thousands)
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
|
2018
|
|
|
2017
|
|
|
Rate
(1)
|
|
|
DZ loan
|
|
$
|
97,999
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97,999
|
|
|
$
|
99,984
|
|
|
|
3.51
|
%
|
|
Notes payable to banks
|
|
|
74,845
|
|
|
|
3,003
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,848
|
|
|
|
81,450
|
|
|
|
4.10
|
%
|
|
SBA debentures and borrowings
|
|
|
3,813
|
|
|
|
25,877
|
|
|
|
8,500
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
35,000
|
|
|
|
78,190
|
|
|
|
79,564
|
|
|
|
3.39
|
%
|
|
Retail notes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,625
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,625
|
|
|
|
33,625
|
|
|
|
9.00
|
%
|
|
Preferred securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,000
|
|
|
|
33,000
|
|
|
|
33,000
|
|
|
|
4.15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
176,657
|
|
|
$
|
28,880
|
|
|
$
|
8,500
|
|
|
$
|
33,625
|
|
|
$
|
5,000
|
|
|
$
|
68,000
|
|
|
$
|
320,662
|
|
|
$
|
327,623
|
|
|
|
4.27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Weighted average contractual rate as of March 31, 2018.
|
(A) DZ LOAN
In December 2008, Trust III entered into a DZ loan agreement with DZ Bank, to provide up to $200,000,000 of financing through a commercial
paper conduit to acquire medallion loans from MFC (DZ loan), which was extended in December 2013 until December 2016, and, through an amended and restated credit agreement, which has been further extended several times and currently terminates in
December 2018. The line was reduced to $150,000,000, and which was further reduced in stages lowering to $125,000,000 on July 1, 2016, and remains as an amortizing facility; and of which $97,999,000 was outstanding at March 31, 2018.
During 2017 and 2018, the DZ loan was amended several times, for the most part to improve Trust III’s flexibility under the credit facility.
Page 21 of 89
Borrowings under Trust III’s DZ loan are collateralized by Trust III’s assets. MFC is
the servicer of the loans owned by Trust III. The DZ loan includes a borrowing base covenant and rapid amortization in certain circumstances. In addition, if certain financial tests are not met, MFC can be replaced as the servicer. The interest rate
with the 2013 extension is a pooled short-term commercial paper rate which approximates LIBOR (30 day LIBOR was 1.88% at March 31, 2018) plus 1.65%.
(B) SBA DEBENTURES AND BORROWINGS
In 2016, the SBA approved $10,000,000 of commitments for MCI for a four and a half year term and a 1% fee, which was paid. In 2015, the SBA
approved $15,500,000 of commitments for MCI for a four year term and a 1% fee, which was paid. In 2014, the SBA approved $10,000,000 of commitments for MCI for a four year term and a 1% fee, which was paid. In 2013, the SBA approved $23,000,000 and
$5,000,000 of commitments for FSVC and MCI, respectively, for a four year term and a 1% fee, which was paid, and of which FSVC issued $23,000,000 of debentures, $18,150,000 of which was used to repay maturing debentures, and MCI issued $2,500,000 of
debentures. During 2017, the SBA restructured FSVC’s debentures with SBA totaling $33,485,000 in principal into a new loan by the SBA to Freshstart in the principal amount of $34,024,756 (the “SBA Loan”). In connection with the SBA
loan, FSVC executed a Note (the “SBA Note”), with an effective date of March 1, 2017, in favor of SBA, in the principal amount of $34,024,756. The SBA Loan bears interest at a rate of 3.25% per annum and requires a minimum of
$5,000,000 of principal and interest to be paid on or before February 1, 2018, a minimum of $10,000,000 of principal and interest to be paid on or before February 1, 2019, and all remaining unpaid principal and interest on or before
February 1, 2020, the final maturity date of the SBA Loan. The SBA Loan agreement contains covenants and events of defaults, including, without limitation, payment defaults, breaches of representations and warranties and covenants defaults. As
of at March 31, 2018, $169,985,000 of commitments had been fully utilized, there were $5,500,000 of commitments available, and $78,190,000 was outstanding, including $29,690,000 under the SBA Note.
(C) NOTES PAYABLE TO BANKS
The Company and its subsidiaries have entered into note agreements with a variety of local and regional banking institutions over the years, as
well as other
non-bank
lenders. The notes are typically secured by various assets of the underlying borrower.
The table below summarizes the key attributes of the Company’s various borrowing arrangements with these lenders as of March 31,
2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
Borrower
|
|
# of Lenders
/ Notes
|
|
|
Note
Dates
|
|
|
Maturity
Dates
|
|
|
Type
|
|
Note
Amounts
|
|
|
Balance
Outstanding at
March 31,
2018
|
|
|
Monthly Payment
|
|
|
Average
Interest
Rate at
March 31,
2018
|
|
|
Interest
Rate
Index
(1)
|
|
The Company
|
|
|
6/6
|
|
|
|
4/11 - 8/14
|
|
|
|
4/18 - 7/19
|
|
|
Term loans and demand notes secured by pledged loans
(2)
|
|
$
|
56,079
|
|
|
$
|
56,079
|
|
|
|
Interest
(3)
|
|
|
|
4.40
|
%
|
|
Various
(2)
|
|
Medallion Chicago
|
|
|
3/28
|
|
|
|
11/11 - 12/11
|
|
|
|
10/16 - 6/18
|
|
|
Term loans secured by owned Chicago medallions
(4)
|
|
|
25,708
|
|
|
|
21,769
|
|
|
|
$181 principal & interest
|
|
|
|
3.34
|
%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
81,787
|
|
|
$
|
77,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
At March 31, 2018, 30 day LIBOR was 1.88%, 360 day LIBOR was 2.66%, and the prime rate was 4.75%.
|
|
(2)
|
One note has an interest rate of Prime, one note has an interest rate of Prime plus 0.50%, one note has a fixed interest rate of 3.75%, one note has an interest rate of LIBOR plus 3.75%, and the other interest rates on
these borrowings are LIBOR plus 2%.
|
|
(3)
|
Various agreements call for remittance of all principal received on pledged loans subject to minimum monthly payments ranging from $0 to $70.
|
|
(4)
|
$12,979 guaranteed by the Company.
|
Page 22 of 89
(D) PREFERRED SECURITIES
In June 2007, the Company issued and sold $36,083,000 aggregate principal amount of unsecured junior subordinated notes to Fin Trust which, in
turn, sold $35,000,000 of preferred securities to Merrill Lynch International and issued 1,083 shares of common stock to the Company. The notes bear a variable rate of interest of 90 day LIBOR (2.31% at March 31, 2018) plus 2.13%. The notes
mature in September 2037 and are prepayable at par. Interest is payable quarterly in arrears. The terms of the preferred securities and the notes are substantially identical. In December 2007, $2,000,000 of the preferred securities were
repurchased from a third party investor. At March 31, 2018, $33,000,000 was outstanding on the preferred securities.
(E)
RETAIL NOTES
In April 2016, the Company issued a total of $33,625,000 aggregate principal amount of 9.00% unsecured notes due
2021, with interest payable quarterly in arrears. The Company used the net proceeds from the offering of approximately $31,786,000 to make loans and other investments in portfolio companies and for general corporate purposes, including repaying
borrowings under its DZ loan in the ordinary course of business.
(F) COVENANT COMPLIANCE
Certain of the Company’s debt agreements contain restrictions that require the Company and its subsidiaries to maintain certain financial
ratios, including debt to equity and minimum net worth. The Company was not in compliance with a financial covenant in the DZ loan agreement as of March 31, 2018. The Company is currently in the process of working with DZ Bank to amend such
covenant in the DZ loan agreement. Historically the Company has received approvals for similar amendments. While there can be no assurance that it will be received, the Company has received preliminary indication from DZ Bank that it will
obtain approval for such an amendment. Except as previously set forth, the Company is in compliance with such restrictions as of March 31, 2018.
(6) INCOME TAXES
The Company is subject
to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C, the Company is able, and intends, to file a consolidated federal income tax return with corporate
subsidiaries, including portfolio companies such as Medallion Bank, in which it holds 80 percent or more of the outstanding equity interest measured by both vote and fair value.
Page 23 of 89
The following table sets forth the significant components of our deferred and other tax assets
and liabilities as of March 31, 2018 and December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Unrealized gain on investment in Medallion Bank
|
|
($
|
46,176
|
)
|
|
($
|
35,297
|
)
|
|
Unrealized losses on loans and nonaccrual interest
|
|
|
13,991
|
|
|
|
10,071
|
|
|
Net operating loss carryforwards
(1)
|
|
|
669
|
|
|
|
615
|
|
|
Unrealized gains on investments in other controlled subsidiaries
|
|
|
(3,295
|
)
|
|
|
(3,617
|
)
|
|
Unrealized gains on investments other than securities
|
|
|
(1,094
|
)
|
|
|
(1,395
|
)
|
|
Accrued expenses, compensation
|
|
|
552
|
|
|
|
782
|
|
|
Unrealized gains on other investments
|
|
|
(389
|
)
|
|
|
(542
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liability
|
|
|
(35,742
|
)
|
|
|
(29,383
|
)
|
|
Valuation allowance
|
|
|
(118
|
)
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability, net
|
|
|
(35,860
|
)
|
|
|
(29,422
|
)
|
|
Taxes receivable (payable)
|
|
|
19,465
|
|
|
|
16,886
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred and other tax liabilities
|
|
($
|
16,395
|
)
|
|
($
|
12,536
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As of March 31, 2018, Medallion Chicago collectively has $1,712 of net operating loss carryforwards that expire at various dates between December 31, 2026 and December 31, 2035. Additionally, the Company
anticipates having a net operating loss of $18,290 for the year ended December 31, 2017.
|
The components of our tax
provision (benefit) for the three months ended March 31, 2018 and 2017 were as follows.
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Federal
|
|
($
|
5,895
|
)
|
|
($
|
770
|
)
|
|
State
|
|
|
(1,182
|
)
|
|
|
(177
|
)
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
3,891
|
|
|
|
(881
|
)
|
|
State
|
|
|
2,546
|
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit for income taxes
|
|
($
|
640
|
)
|
|
($
|
1,972
|
)
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of statutory federal income tax (benefit) expense to
consolidated actual income tax benefit reported in net increase in net assets for the three months ended March 31, 2018 and 2017.
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Statutory Federal Income tax benefit at 21% (35% as of March 31, 2017)
|
|
($
|
3,258
|
)
|
|
($
|
301
|
)
|
|
State and local income taxes, net of federal income tax benefit
|
|
|
(504
|
)
|
|
|
(47
|
)
|
|
Appreciation of Medallion Bank
|
|
|
1,974
|
|
|
|
(1,525
|
)
|
|
Change in effective state income tax rate
|
|
|
1,358
|
|
|
|
—
|
|
|
Other
|
|
|
(210
|
)
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit for income taxes
|
|
($
|
640
|
)
|
|
($
|
1,972
|
)
|
|
|
|
|
|
|
|
|
|
|
On December 22, 2017, the U.S. Government signed into law the “Tax Cuts and Jobs Act” which,
starting in 2018, reduces the Company’s corporate statutory income tax rate from 35% to 21%, but eliminates or increases certain permanent differences.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers
the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative
evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. It is based upon these considerations by which the Company has determined the valuation allowance
deemed necessary as of March 31, 2018.
Page 24 of 89
The Company has filed tax returns in many states. Federal, New York State, and New York City tax
filings of the Company for the tax years 2014 through the present are the more significant filings that are open for examination.
(7) STOCK OPTIONS
AND RESTRICTED STOCK
The Company has a stock option plan (2006 Stock Option Plan) available to grant both incentive and nonqualified
stock options to employees. The 2006 Stock Option Plan, which was approved by the Board of Directors on February 15, 2006 and shareholders on June 16, 2006, provided for the issuance of a maximum of 800,000 shares of common stock of the
Company. No additional shares are available for issuance under the 2006 Stock Option Plan. The 2006 Stock Option Plan is administered by the Compensation Committee of the Board of Directors. The option price per share may not be less than the
current market value of the Company’s common stock on the date the option is granted. The term and vesting periods of the options are determined by the Compensation Committee, provided that the maximum term of an option may not exceed a period
of ten years.
The Company’s Board of Directors approved the 2015 Employee Restricted Stock Plan (2015 Restricted Stock Plan) on
February 13, 2015 and which was approved by the Company’s shareholders on June 5, 2015. The 2015 Restricted Stock Plan became effective upon the Company’s receipt of exemptive relief from the SEC on March 1, 2016. The terms
of 2015 Restricted Stock Plan provide for grants of restricted stock awards to the Company’s employees. A grant of restricted stock is a grant of shares of the Company’s common stock which, at the time of issuance, is subject to certain
forfeiture provisions, and thus is restricted as to transferability until such forfeiture restrictions have lapsed. A total of 700,000 shares of the Company’s common stock are issuable under the 2015 Restricted Stock Plan, and 236,237 remained
issuable as of March 31, 2018. Awards under the 2015 Restricted Stock Plan are subject to certain limitations as set forth in the 2015 Restricted Stock Plan. The 2015 Restricted Stock Plan will terminate when all shares of common stock
authorized for delivery under the 2015 Restricted Stock Plan have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2015 Restricted Stock Plan, whichever first occurs.
The Company’s Board of Directors approved the 2009 Employee Restricted Stock Plan (the Employee Restricted Stock Plan) on
April 16, 2009. The Employee Restricted Stock Plan became effective upon the Company’s receipt of exemptive relief from the SEC and approval of the Employee Restricted Stock Option Plan by the Company’s shareholders on June 11,
2010. No additional shares are available for issuance under the Employee Restricted Stock Plan. The terms of the Employee Restricted Stock Plan provided for grants of restricted stock awards to the Company’s employees. A grant of restricted
stock is a grant of shares of the Company’s common stock which, at the time of issuance, is subject to certain forfeiture provisions, and thus is restricted as to transferability until such forfeiture restrictions have lapsed. A total of
800,000 shares of the Company’s common stock were issuable under the Employee Restricted Stock Plan, and as of March 31, 2018, none of the Company’s common stock remained available for future grants. Awards under the 2009 Employee
Plan are subject to certain limitations as set forth in the Employee Restricted Stock Plan. The Employee Restricted Stock Plan will terminate when all shares of common stock authorized for delivery under the Employee Restricted Stock Plan have been
delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the Employee Restricted Stock Plan, whichever first occurs.
The Company’s Board of Directors approved the 2015
Non-Employee
Director Stock Option Plan (2015
Director Plan) on March 12, 2015, which was approved by the Company’s shareholders on June 5, 2015, and on which exemptive relief to implement the 2015 Director Plan was received from the SEC on February 29, 2016. A total of
300,000 shares of the Company’s common stock are issuable under the 2015 Director Plan, and 258,334 remained issuable as of March 31, 2018. Under the 2015 Director Plan, unless otherwise determined by a committee of the Board of Directors
comprised of directors who are not eligible for grants under the 2015 Director Plan, the Company will grant options to purchase 12,000 shares of the Company’s common stock to a
non-employee
director upon
election to the Board of Directors, with an adjustment for directors who are elected to serve less than a full term. The option price per share may not be less than the current market value of the Company’s common stock on the date the option
is granted. Options granted under the 2015 Director Plan are exercisable annually, as defined in the 2015 Director Plan. The term of the options may not exceed ten years.
The Company’s Board of Directors approved the First Amended and Restated 2006 Director Plan (the Amended Director Plan) on April 16,
2009, which was approved by the Company’s shareholders on June 5, 2009, and on which exemptive relief to implement the Amended Director Plan was received from the SEC on July 17, 2012. A total of 200,000 shares of the Company’s
common stock were issuable under the Amended Director Plan. No additional shares are available for issuance under the Amended Director Plan. Under the Amended Director Plan, unless otherwise determined by a committee of the Board of Directors
comprised of directors who are not eligible for grants under the Amended Director Plan, the Company will grant options to purchase 9,000 shares of the Company’s common stock to an Eligible Director upon election to the Board of Directors, with
an adjustment for directors who are elected to serve less than a full term. The option price per share may not be less than the current market value of the Company’s common stock on the date the option is granted. Options granted under the
Amended Director Plan are exercisable annually, as defined in the Amended Director Plan. The term of the options may not exceed ten years.
Page 25 of 89
No additional shares are available for future issuance under the Employee Restricted Stock Plan
and the Amended Director Plan. At March 31, 2018, 320,626 options on the Company’s common stock were outstanding under the 2006, and 2015 plans, of which 273,960 options were exercisable, and there were 207,995 unvested shares of the
Company’s common stock outstanding under the Employee Restricted Stock Plan.
The fair value of each restricted stock grant is
determined on the date of grant by the closing market price of the Company’s common stock on the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. There were no
options granted during the three months ended March 31, 2018 and 2017. The following assumption categories are used to determine the value of any option grants.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Risk free interest rate
|
|
|
NA
|
|
|
|
NA
|
|
|
Expected dividend yield
|
|
|
NA
|
|
|
|
NA
|
|
|
Expected life of option in years
(1)
|
|
|
NA
|
|
|
|
NA
|
|
|
Expected volatility
(2)
|
|
|
NA
|
|
|
|
NA
|
|
|
(1)
|
Expected life is calculated using the simplified method.
|
|
(2)
|
We determine our expected volatility based on our historical volatility.
|
The following table
presents the activity for the stock option programs for the periods ended March 31, 2018 and December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options
|
|
|
Exercise
Price Per
Share
|
|
|
Weighted
Average
Exercise Price
|
|
|
Outstanding at December 31, 2016
|
|
|
345,518
|
|
|
$
|
7.10-13.84
|
|
|
$
|
9.67
|
|
|
Granted
|
|
|
29,666
|
|
|
|
2.14-2.61
|
|
|
|
2.35
|
|
|
Cancelled
|
|
|
(54,558
|
)
|
|
|
10.76-11.21
|
|
|
|
10.94
|
|
|
Exercised
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2017
|
|
|
320,626
|
|
|
|
2.14-13.84
|
|
|
|
8.78
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2018
(2)
|
|
|
320,626
|
|
|
$
|
2.14-13.84
|
|
|
$
|
8.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at March 31, 2018
(2)
|
|
|
273,960
|
|
|
$
|
7.10-13.84
|
|
|
$
|
9.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $0 and $0 for the
2018 and 2017 first quarters.
|
|
(2)
|
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at March 31, 2018 and the related exercise price of the underlying options, was $68,000 for
outstanding options and $0 for exercisable options as of March 31, 2018. The remaining contractual life was 2.24 years for outstanding options and 1.14 years for exercisable options at March 31, 2018.
|
The following table presents the activity for the restricted stock programs for the periods ended March 31, 2018 and December 31,
2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
Grant Price
Per Share
|
|
|
Weighted
Average
Grant Price
|
|
|
Outstanding at December 31, 2016
|
|
|
167,703
|
|
|
|
3.95-13.46
|
|
|
|
8.88
|
|
|
Granted
|
|
|
327,251
|
|
|
|
2.06-3.93
|
|
|
|
2.48
|
|
|
Cancelled
|
|
|
(8,988
|
)
|
|
|
2.14-10.08
|
|
|
|
3.07
|
|
|
Vested
(1)
|
|
|
(77,384
|
)
|
|
|
9.08-13.46
|
|
|
|
11.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2017
|
|
|
408,582
|
|
|
|
2.06-10.38
|
|
|
|
3.45
|
|
|
Granted
|
|
|
97,952
|
|
|
|
4.39
|
|
|
|
4.39
|
|
|
Cancelled
|
|
|
(2,226
|
)
|
|
|
3.93-9.08
|
|
|
|
5.86
|
|
|
Vested
(1)
|
|
|
(296,313
|
)
|
|
|
2.06-10.38
|
|
|
|
3.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2018
(2)
|
|
|
207,995
|
|
|
$
|
2.06-7.98
|
|
|
$
|
4.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 26 of 89
|
(1)
|
The aggregate fair value of the restricted stock vested was $1,209,000 and $136,000 for the 2018 and 2017 first quarters.
|
|
(2)
|
The aggregate fair value of the restricted stock was $967,000 as of March 31, 2018. The remaining vesting period was 2.00 years at March 31, 2018.
|
The following table presents the activity for the unvested options outstanding under the plans for the 2018 first quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Options
|
|
|
Exercise Price
Per Share
|
|
|
Weighted Average Exercise
Price
|
|
|
Outstanding at December 31, 2017
|
|
|
46,666
|
|
|
$
|
2.14-9.38
|
|
|
$
|
4.52
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vested
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2018
|
|
|
46,666
|
|
|
$
|
2.14-9.38
|
|
|
$
|
4.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The intrinsic value of the options vested was $0 for the 2018 first quarter.
(8) SEGMENT REPORTING
The Company has
one business segment, its lending and investing operations. This segment originates and services medallion, secured commercial, and consumer loans, and invests in both marketable and nonmarketable securities.
(9) OTHER OPERATING EXPENSES
The major
components of other operating expenses were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Travel, meals, and entertainment
|
|
$
|
206
|
|
|
$
|
194
|
|
|
Loan collection expenses
|
|
|
120
|
|
|
|
50
|
|
|
Miscellaneous taxes
|
|
|
120
|
|
|
|
18
|
|
|
Directors fees
|
|
|
89
|
|
|
|
15
|
|
|
Computer expense
|
|
|
74
|
|
|
|
60
|
|
|
Office expense
|
|
|
56
|
|
|
|
57
|
|
|
Insurance
|
|
|
52
|
|
|
|
42
|
|
|
Other expenses
|
|
|
76
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other operating expenses
|
|
$
|
793
|
|
|
$
|
503
|
|
|
|
|
|
|
|
|
|
|
|
Page 27 of 89
(10) SELECTED FINANCIAL RATIOS AND OTHER DATA
The following table provides selected financial ratios and other data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands,
except
per
share
data)
|
|
2018
|
|
|
2017
|
|
|
Net share data
|
|
|
|
|
|
|
|
|
|
Net asset value at the beginning of the period
|
|
$
|
11.80
|
|
|
$
|
11.91
|
|
|
Net investment income (loss)
|
|
|
(0.15
|
)
|
|
|
(0.05
|
)
|
|
Income tax (provision) benefit
|
|
|
0.03
|
|
|
|
0.08
|
|
|
Net realized gains (losses) on investments
|
|
|
(1.44
|
)
|
|
|
0.04
|
|
|
Net change in unrealized appreciation (depreciation) on investments
|
|
|
0.94
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations
|
|
|
(0.62
|
)
|
|
|
0.05
|
|
|
Issuance of common stock
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
Repurchase of common stock
|
|
|
—
|
|
|
|
—
|
|
|
Total distributions
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total decrease in net asset value
|
|
|
(0.65
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value at the end of the period
(1)
|
|
$
|
11.15
|
|
|
$
|
11.91
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share market value at beginning of period
|
|
$
|
3.53
|
|
|
$
|
3.02
|
|
|
Per share market value at end of period
|
|
|
4.65
|
|
|
|
1.98
|
|
|
Total return
(2)
|
|
|
(129
|
%)
|
|
|
(140
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
Ratios/supplemental data
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity (net assets)
|
|
$
|
272,437
|
|
|
$
|
287,335
|
|
|
Average net assets
|
|
|
284,021
|
|
|
|
285,396
|
|
|
Total expense ratio
(3) (4)
|
|
|
10.02
|
%
|
|
|
5.10
|
%
|
|
Operating expenses to average net assets
(4)
|
|
|
5.87
|
|
|
|
3.16
|
|
|
Net investment income after income taxes to average net assets
(4)
|
|
|
(4.61
|
%)
|
|
|
(0.62
|
%)
|
|
(1)
|
Includes $0 and $0 of undistributed net investment income per share and $0 and $0 of undistributed net realized gains per share as of March 31, 2018 and 2017.
|
|
(2)
|
Total return is calculated by dividing the change in market value of a share of common stock during the period, assuming the reinvestment of distributions on the payment date, by the per share market value at the
beginning of the period.
|
|
(3)
|
Total expense ratio represents total expenses (interest expense, operating expenses, and income taxes) divided by average net assets.
|
|
(4)
|
MSC has assumed certain of the Company’s servicing obligations, and as a result, servicing fee income of $1,290 and $1,313 and operating expenses of $1,150 and $1,167, which formerly were the Company’s, were
now MSC’s for the quarters ended March 31, 2018 and 2017. Excluding the impact of the MSC amounts, the total expense ratio, operating expense ratio, and net investment income ratio would have been 11.75% and 6.88%, 7.51% and 4.82%, and
(4.49%) and (0.53%) for the first quarters of 2018 and 2017.
|
(11) RECENTLY ISSUED ACCOUNTING STANDARDS
In February 2018, the FASB issued Accounting Standards Update (ASU)
2018-03
Technical Corrections and
Improvements to Financial Instruments- Overall (Subtopic
825-10).
The objective of this update is to provide clarity and correct unintended application of guidance as it relates to Update
2016-01
for financial instruments. The amendments in this update are not required to be adopted until the interim period beginning after June 15, 2018. Early adoption is permitted. The Company is assessing the
impact the update will have on its financial condition and results of operations.
In January 2017, the FASB issued ASU
2017-04.
Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The objective of this update is to simplify the subsequent measurement of goodwill, by eliminating step 2
from the goodwill impairment test. The amendments in this update are effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not believe this update will have a material
impact on its financial condition.
Page 28 of 89
In June 2016, the FASB issued
ASU 2016-13, “Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The main objective of this new standard is to provide financial
statement users with more decision-useful information about the expected credit losses on financial assets and other commitments to extend credit held by a reporting entity at each reporting date. Effective dates vary according to business entity
type, and early adoption is permitted for all entities. The aftermath of the global economic crisis and the delayed recognition of credit losses associated with loans (and other financial instruments) was identified as a weakness in the application
of existing accounting standards. Specifically, because the existing “incurred” loss model delays recognition until it is probable a credit loss was incurred, the FASB explored alternatives that would use more forward-looking information.
Under the FASB’s new standard, the concepts used by entities to account for credit losses on financial instruments will fundamentally change. The existing “probable” and “incurred” loss recognition threshold is removed. Loss
estimates are based upon lifetime “expected” credit losses. The use of past and current events must now be supplemented with “reasonable and supportable” expectations about the future to determine the amount of credit loss. The
collective changes to the recognition and measurement accounting standards for financial instruments and their anticipated impact on the allowance for credit losses modeling have been universally referred to as the CECL (current expected credit
loss) model.
ASU 2016-13 applies
to all entities and is effective for fiscal years beginning after December 15, 2019 for public entities and is effective for fiscal years beginning after
December 15, 2020 for all other entities, with early adoption permitted. The Company is assessing the impact the update will have on its financial statement, but expects the update to have a significant impact on how the Company expects to
account for estimated credit losses on its loans.
In February 2016, the FASB issued ASU
2016-02,
Leases (Topic 842). ASU
2016-02
requires the recognition of lease assets and lease liabilities by lessees for leases classified as operating under current GAAP. ASU
2016-02
applies to all entities and is effective for fiscal years beginning after December 15, 2018 for public entities, with early adoption permitted. The Company is assessing the impact the update
will have on its financial condition and results of operations.
(12) RELATED PARTY TRANSACTIONS
Certain directors, officers, and shareholders of the Company are also directors and officers of its wholly-owned subsidiaries, MFC, MCI, FSVC,
and Medallion Bank, as well as of certain portfolio investment companies. Officer salaries are set by the Board of Directors of the Company.
Jeffrey Rudnick, the son of one of the Company’s directors, is an officer of LAX Group, LLC (LAX), one of the Company’s portfolio
companies. Mr. Rudnick receives a salary from LAX of $172,000 per year, and certain equity from LAX consisting of 10% ownership in LAX Class B stock, vesting at 3.34% per year; 5% of any new equity raised from outside investors at a
valuation of $1,500,000 or higher; and 10% of LAX’s profits as a year end bonus. In addition, Mr. Rudnick provides consulting services to the Company directly for a monthly retainer of $4,200.
At March 31, 2018, December 31, 2017, and March 31, 2017, the Company and MSC serviced $308,346,000, $311,988,000, and
$324,246,000 of loans for Medallion Bank. Included in net investment income were amounts as described in the table below that were received from Medallion Bank for services rendered in originating and servicing loans, and also for reimbursement of
certain expenses incurred on their behalf.
The Company has assigned its servicing rights to the Medallion Bank portfolio to MSC, a
wholly-owned unconsolidated portfolio investment. The costs of servicing are allocated to MSC by the Company, and the servicing fee income is billed and collected from Medallion Bank by MSC. As a result, in the 2018 and 2017 first quarters,
$1,290,000 and $1,313,000 of servicing fee income was earned by MSC.
The following table summarizes the net revenues received from
Medallion Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
(Dollars
in
thousands)
|
|
2018
|
|
|
2017
|
|
|
Reimbursement of operating expenses
|
|
$
|
250
|
|
|
$
|
227
|
|
|
Loan origination and servicing fees
|
|
|
6
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
$
|
256
|
|
|
$
|
228
|
|
|
|
|
|
|
|
|
|
|
|
The Company had a loan to Medallion Fine Art, Inc. in the amount of $0 and $999,000 as of March 31, 2018
and December 31, 2017, which was repaid in full during the 2018 first quarter. The loan bore interest at a rate of 12%, all of which was paid in kind. During 2018 and 2017 first quarters, the Company advanced $0 and $0, and was repaid
$999,000 and $1,800,000 with respect to this loan. Additionally, the Company recognized $10,000 and $82,000 of interest income for the three months ended March 31, 2018 and 2017 with respect to this loan.
Page 29 of 89
The Company and MCI had loans to RPAC Racing LLC, an affiliate of Medallion Motorsports LLC which
totaled $16,877,000 and $16,472,000 as of March 31, 2018 and December 31, 2017, and which were placed on nonaccrual during 2017. The loans bear interest at 2%, inclusive of cash and paid in kind interest. The Company and MCI recognized $0
and $89,000 of interest income for the three months ended March 31, 2018 and 2017 with respect to these loans.
(13) FAIR VALUE OF FINANCIAL
INSTRUMENTS
FASB ASC Topic 825, “Financial Instruments,” requires disclosure of fair value information about certain
financial instruments, whether assets, liabilities, or
off-balance-sheet
commitments, if practicable. The following methods and assumptions were used to estimate the fair value of each class of financial
instrument. Fair value estimates that were derived from broker quotes cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.
(a)
Investments—
The Company’s investments are recorded at the estimated fair value of such investments.
(b)
Floating
rate
borrowings—
Due to the short-term nature of these instruments, the carrying amount
approximates fair value.
(c)
Commitments
to
extend
credit—
The fair value of commitments to extend
credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and present creditworthiness of the counter parties. For fixed rate loan commitments, fair value also
includes a consideration of the difference between the current levels of interest rates and the committed rates. At March 31, 2018 and December 31, 2017, the estimated fair value of these
off-balance-sheet
instruments was not material.
(d)
Fixed
rate
borrowings
- The fair value of the debentures payable to the SBA is estimated based on current market interest rates for similar debt.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
(Dollars
in
thousands)
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
595,402
|
|
|
$
|
595,402
|
|
|
$
|
610,135
|
|
|
$
|
610,135
|
|
|
Cash
(1)
|
|
|
10,956
|
|
|
|
10,956
|
|
|
|
12,690
|
|
|
|
12,690
|
|
|
Accrued interest receivable
(2)
|
|
|
417
|
|
|
|
417
|
|
|
|
547
|
|
|
|
547
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds borrowed
(2)
|
|
|
320,662
|
|
|
|
320,948
|
|
|
|
327,623
|
|
|
|
330,084
|
|
|
Accrued interest payable
(2)
|
|
|
3,582
|
|
|
|
3,582
|
|
|
|
3,831
|
|
|
|
3,831
|
|
|
(1)
|
Categorized as level 1 within the fair value hierarchy.
|
|
(2)
|
Categorized as level 3 within the fair value hierarchy.
|
|
(3)
|
As of March 31, 2018 and December 31, 2017, publicly traded retail notes traded at a premium to par of $286 and $2,461.
|
(14) FAIR VALUE OF ASSETS AND LIABILITIES
The Company follows the provisions of FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, establishes a
fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. The Company accounts for substantially all of its financial instruments at fair value or considers fair
value in its measurement, in accordance with the accounting guidance for investment companies. See Note 2 sections “Fair Value of Assets and Liabilities” and “Investment Valuation” for a description of our valuation
methodology which is unchanged during 2018.
In accordance with FASB ASC 820, the Company has categorized its assets and liabilities
measured at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or
liabilities (level 1) and the lowest priority to unobservable inputs (level 3). Our assessment and classification of an investment within a level can change over time based upon maturity or liquidity of the investment and would be reflected at
the beginning of the quarter in which the change occurred.
As required by FASB ASC 820, when the inputs used to measure fair value fall
within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a level 3 fair value
measurement may include inputs that are observable (level 1 and 2) and unobservable (level 3). Therefore gains and losses for such assets and liabilities categorized within the level 3 table below may include changes in fair value
that are attributable to both observable inputs (level 1 and 2) and unobservable inputs (level 3).
Page 30 of 89
Assets and liabilities measured at fair value, recorded on the consolidated balance sheets, are
categorized based on the inputs to the valuation techniques as follows:
Level 1. Assets and liabilities whose values are based on
unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, most US Government and agency
securities, and certain other sovereign government obligations).
Level 2. Assets and liabilities whose values are based on quoted
prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
|
|
A)
|
Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);
|
|
|
B)
|
Quoted price for identical or similar assets or liabilities in
non-active
markets (for example, corporate and municipal bonds, which trade infrequently);
|
|
|
C)
|
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most
over-the-counter
derivatives, including interest rate and currency swaps); and
|
|
|
D)
|
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability (examples include certain
residential and commercial mortgage-related assets, including loans, securities, and derivatives).
|
Level 3. Assets and
liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a
market participant would use in pricing the assets or liability (examples include certain private equity investments, and certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).
A review of fair value hierarchy classification is conducted on a quarterly basis. Changes in the observability of valuation inputs may result
in a reclassification for certain assets or liabilities. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in/out of the level 3 category as of the beginning of the quarter in which the
reclassifications occur. The following paragraphs describe the sensitivity of the various level 3 valuations to the factors that are relevant in their valuation analysis.
Medallion loans are primarily collateral-based lending, whereby the collateral value exceeds the amount of the loan, providing sufficient
excess collateral to protect against losses to the Company. As a result, the initial valuation assessment is that as long as the loan is current and performing, its fair value approximates the par value of the loan. To the extent a loan becomes
nonperforming, the collateral value has been adequate to result in a complete recovery. In a case where the collateral value was inadequate, an unrealized loss would be recorded to reflect any shortfall. Collateral values for medallion loans are
typically obtained from transfer prices reported by the regulatory agency in a particular local market (e.g. New York City Taxi and Limousine Commission). Recently, as transfer price activity and the collateral value of medallion loans has declined,
and greater weight has been placed on the operating cash flows of the borrowers and the values of their personal guarantees in determining whether or not a valuation adjustment is necessary. Those portfolios had historically been at very low loan to
collateral value ratios, and as a result, historically have not been highly sensitive to changes in collateral values. Over the last few years, as medallion collateral values have declined, the impact on the Company’s valuation analysis has
become more significant, which could result in a significantly lower fair value measurement.
The mezzanine and other secured commercial
portions of the commercial loan portfolio are a combination of cash flow and collateral based lending. The initial valuation assessment is that as long as the loan is current and performing, its fair value approximates the par value of the loan. If
a loan becomes nonperforming, an evaluation is performed which considers and analyzes a variety of factors which may include the financial condition and operating performance of the borrower, the adequacy of the collateral, individual credit risks,
historical loss experience, the relationships between current and projected market rates and portfolio rates of interest and maturities, as well as general market trends for businesses in the same industry. Since each individual nonperforming loan
has its own unique attributes, the factors analyzed, and their relative importance to each valuation analysis, differ between each asset, and may differ from period to period for a particular asset. The valuation is highly sensitive to changes in
the assumptions used. To the extent that any assumption in the analysis changes significantly from one period to another, that change could result in a significantly lower or higher fair market value measurement. For example, if a borrower’s
valuation was determined primarily on the cash flow generated from their business, then if that cash flow deteriorated significantly from a prior period valuation, that could have a material impact on the valuation in the current period.
The investment in Medallion Bank is subject to a thorough valuation analysis as described previously, and on at least an annual basis, the
Company also receives an opinion regarding the valuation from an independent third party to assist the Board of Directors in its determination of the fair value. The Company determines whether any factors give rise to a valuation different than
recorded book value, including various regulatory restrictions that were established at Medallion Bank’s inception, by the FDIC and State of Utah,
Page 31 of 89
and also by additional regulatory restrictions, such as the prior moratorium imposed by the Dodd-Frank Act on the acquisition of control of an industrial bank by a “commercial firm” (a
company whose gross revenues are primarily derived from
non-financial
activities) which expired in July 2013, and the lack of any new charter issuances since the moratorium’s expiration. Because of these
restrictions and other factors, the Company’s Board of Directors had previously determined that Medallion Bank had little value beyond its recorded book value. As a result of this valuation process, the Company had previously used Medallion
Bank’s actual results of operations as the best estimate of changes in fair value, and recorded the results as a component of unrealized appreciation (depreciation) on investments In the 2015 second quarter, the Company first became aware of
external interest in Medallion Bank and its portfolio assets at values in excess of their book value. Expression of interest in Medallion Bank from both investment bankers and interested parties has continued to the present time. The Company
incorporated these new factors in the Medallion Bank’s fair value analysis and the Board of Directors determined that Medallion Bank had a fair value in excess of book value. In addition, in the 2016 third quarter there was a court ruling
involving a marketplace lender that the Company believes heightens the interest of marketplace lenders to acquire or merge with Utah industrial banks. The Company also engaged a valuation specialist to assist the Board of Directors in their
determination of Medallion Bank’s fair value, and this appreciation of $15,500,000 was thereby recorded in 2015, and additional appreciation of $128,918,000 was recorded in 2016, $7,489,000 was recorded in 2017 and $39,826,000 was recorded in
2018. See Note 4 for additional information about Medallion Bank.
Investments in controlled subsidiaries, other than Medallion Bank,
equity investments, and investments other than securities are valued similarly, while also considering available current market data, including relevant and applicable market trading and transaction comparables, the nature and realizable value of
any collateral, applicable interest rates and market yields, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, and borrower financial analysis, among other
factors. As a result of this valuation process, the Company uses the actual results of operations of the controlled subsidiaries as the best estimate of changes in fair value, in most cases, and records the results as a component of unrealized
appreciation (depreciation) on investments. For the balance of controlled subsidiary investments, equity investments, and investments other than securities positions, the result of the analysis results in changes to the value of the position if
there is clear evidence that it’s value has either decreased or increased in light of the specific facts considered for each investment. The valuation is highly sensitive to changes in the assumptions used. To the extent that any assumption in
the analysis changes significantly from one period to another, that change could result in a significantly lower or higher fair market value measurement. For example, if an investee’s valuation was determined primarily on the cash flow
generated from their business, then if that cash flow deteriorated significantly from a prior period valuation, that could have a material impact on the valuation in the current period.
The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring
basis as of March 31, 2018 and December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
2018 Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medallion loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161,155
|
|
|
$
|
161,155
|
|
|
Commercial loans
|
|
|
—
|
|
|
|
—
|
|
|
|
93,620
|
|
|
|
93,620
|
|
|
Investments in Medallion Bank and other controlled subsidiaries
|
|
|
—
|
|
|
|
—
|
|
|
|
331,169
|
|
|
|
331,169
|
|
|
Equity investments
|
|
|
—
|
|
|
|
—
|
|
|
|
9,458
|
|
|
|
9,458
|
|
|
Investments other than securities
|
|
|
—
|
|
|
|
—
|
|
|
|
5,535
|
|
|
|
5,535
|
|
|
Other assets
|
|
|
—
|
|
|
|
—
|
|
|
|
339
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medallion loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
208,279
|
|
|
$
|
208,279
|
|
|
Commercial loans
|
|
|
—
|
|
|
|
—
|
|
|
|
90,188
|
|
|
|
90,188
|
|
|
Investments in Medallion Bank and other controlled subsidiaries
|
|
|
—
|
|
|
|
—
|
|
|
|
302,147
|
|
|
|
302,147
|
|
|
Equity investments
|
|
|
—
|
|
|
|
—
|
|
|
|
9,521
|
|
|
|
9,521
|
|
|
Investments other than securities
|
|
|
—
|
|
|
|
—
|
|
|
|
7,450
|
|
|
|
7,450
|
|
|
Other assets
|
|
|
—
|
|
|
|
—
|
|
|
|
339
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in level 3 investments in Medallion Bank and other controlled subsidiaries is primarily the
investment in Medallion Bank, as well as other consolidated subsidiaries such as MSC, and other investments detailed in the consolidated summary schedule of investments following these footnotes. Included in level 3 equity investments are
unregistered shares of common stock in a publicly-held company, as well as certain private equity positions in
non-marketable
securities.
Page 32 of 89
The following tables provide a summary of changes in fair value of the Company’s level 3
assets and liabilities for the quarters ended March 31, 2018 and 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Medallion
Loans
|
|
|
Commercial
Loans
|
|
|
Investments in
Medallion
Bank & Other
Controlled
Subs
|
|
|
Equity
Investments
|
|
|
Investments
Other Than
Securities
|
|
|
Other
Assets
|
|
|
December 31, 2017
|
|
$
|
208,279
|
|
|
$
|
90,188
|
|
|
$
|
302,147
|
|
|
$
|
9,521
|
|
|
$
|
7,450
|
|
|
$
|
339
|
|
|
Gains (losses) included in earnings
|
|
|
(38,190
|
)
|
|
|
(8
|
)
|
|
|
29,143
|
|
|
|
(993
|
)
|
|
|
(1,915
|
)
|
|
|
—
|
|
|
Purchases, investments, and issuances
|
|
|
7
|
|
|
|
7,252
|
|
|
|
462
|
|
|
|
935
|
|
|
|
—
|
|
|
|
—
|
|
|
Sales, maturities, settlements, and distributions
|
|
|
(8,941
|
)
|
|
|
(3,812
|
)
|
|
|
(583
|
)
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Transfers in (out)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
$
|
161,155
|
|
|
$
|
93,620
|
|
|
$
|
331,169
|
|
|
$
|
9,458
|
|
|
$
|
5,535
|
|
|
$
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts related to held assets
(1)
|
|
($
|
38,190
|
)
|
|
($
|
10
|
)
|
|
$
|
29,143
|
|
|
($
|
993
|
)
|
|
($
|
1,915
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total realized and unrealized gains (losses) included in income for the period which relate to assets held as of March 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Medallion
Loans
|
|
|
Commercial
Loans
|
|
|
Investments in
Medallion
Bank & Other
Controlled
Subs
|
|
|
Equity
Investments
|
|
|
Investments
Other Than
Securities
|
|
|
Other
Assets
|
|
|
December 31, 2016
|
|
$
|
266,816
|
|
|
$
|
83,634
|
|
|
$
|
293,360
|
|
|
$
|
8,407
|
|
|
$
|
9,510
|
|
|
$
|
354
|
|
|
Gains (losses) included in earnings
|
|
|
(8,695
|
)
|
|
|
(294
|
)
|
|
|
8,124
|
|
|
|
1,261
|
|
|
|
—
|
|
|
|
—
|
|
|
Purchases, investments, and issuances
|
|
|
—
|
|
|
|
96
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Sales, maturities, settlements, and distributions
|
|
|
(7,145
|
)
|
|
|
(9,688
|
)
|
|
|
(598
|
)
|
|
|
(28
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Transfers in (out)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
$
|
250,976
|
|
|
$
|
73,748
|
|
|
$
|
300,886
|
|
|
$
|
9,640
|
|
|
$
|
9,510
|
|
|
$
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts related to held
assets
(1)
|
|
($
|
8,670
|
)
|
|
($
|
332
|
)
|
|
$
|
8,124
|
|
|
$
|
1,261
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total realized and unrealized gains (losses) included in income for the period which relate to assets held as of March 31, 2017.
|
Significant Unobservable Inputs
ASC
Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. The tables below are not intended to be
all-inclusive,
but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.
The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities
as of March 31, 2018 and December 31, 2017 were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Fair Value
at 3/31/18
|
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range (Weighted Average)
|
|
|
Medallion Loans
|
|
$
|
161,155
|
|
|
Precedent market transactions
|
|
Adequacy of collateral (loan to value)
|
|
|
2% - 620% (209
|
%)
|
|
Commercial Loans – Mezzanine and Other
|
|
|
93,620
|
|
|
Borrower financial analysis
|
|
Financial condition and operating performance of
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
the borrower
Portfolio yields
|
|
|
4.75% - 19.00% (12.07
|
%)
|
|
Investment in Medallion Bank
|
|
|
320,143
|
|
|
Precedent M&A transactions
|
|
Price / Book Value multiples
|
|
|
2.25x to 2.50x
|
|
|
|
|
|
|
|
|
|
|
Price / Earnings multiples
|
|
|
25.00x to 28.00x
|
|
|
|
|
|
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
|
25.00%
|
|
Page 33 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Fair Value
at 3/31/18
|
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
(Weighted Average)
|
|
|
|
|
|
|
|
|
|
|
Terminal value
|
|
$
|
534,167 to $635,914
|
|
|
Investment in Other Controlled Subsidiaries
|
|
|
4,620
|
|
|
Investee financial analysis
|
|
Financial condition and operating performance
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Market value of invested capital
|
|
$
|
37,100 - $43,600
|
|
|
|
|
|
|
|
|
|
|
Equity value
|
|
$
|
1,195
|
|
|
|
|
|
3,716
|
|
|
Investee book value adjusted for asset appreciation
|
|
Financial condition and operating performance of the investee
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Third party valuation/ offer to purchase asset
|
|
|
N/A
|
|
|
|
|
|
2,572
|
|
|
Investee book value adjusted for market appreciation
|
|
Financial condition and operating performance of the investee
|
|
|
N/A
|
|
|
|
|
|
|
|
|
Precedent Arm’s Length Offer
|
|
Business enterprise value
|
|
$
|
6,018 - $7,218
|
|
|
|
|
|
|
|
|
|
|
Business enterprise value/revenue multiples
|
|
|
0.94x – 4.42x
|
|
|
|
|
|
118
|
|
|
Investee book value and equity pickup
|
|
Financial condition and
operating
performance of the investee
|
|
|
N/A
|
|
|
Equity Investments
|
|
|
6,352
|
|
|
Investee financial analysis
|
|
Financial condition and operating performance of the borrower
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Collateral support
|
|
|
N/A
|
|
|
|
|
|
1,195
|
|
|
Investee financial analysis
|
|
Equity value
|
|
$
|
1,195
|
|
|
|
|
|
|
|
|
|
|
Preferred equity yield
|
|
|
12%
|
|
|
|
|
|
1,455
|
|
|
Precedent Market transaction
|
|
Offering price
|
|
$
|
8.73 / share
|
|
|
|
|
|
456
|
|
|
Investee book value
|
|
Valuation indicated by investee filings
|
|
|
N/A
|
|
|
Investments Other Than Securities
|
|
|
5,535
|
|
|
Precedent market transaction
|
|
Transfer prices of Chicago medallions
|
|
|
N/A
|
|
|
|
|
|
|
|
|
Cash flow analysis
|
|
Discount rate in cash flow analysis
|
|
|
6%
|
|
|
Other Assets
|
|
|
339
|
|
|
Borrower collateral analysis
|
|
Adequacy of collateral (loan to value)
|
|
|
0%
|
|
Page 34 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in
thousands)
|
|
Fair Value
at 12/31/17
|
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
(Weighted Average)
|
|
|
Medallion Loans
|
|
$
|
208,279
|
|
|
Precedent market transactions
|
|
Adequacy of collateral (loan to value)
|
|
|
1% - 420% (131%
|
)
|
|
Commercial Loans – Mezzanine and Other
|
|
|
90,188
|
|
|
Borrower financial analysis
|
|
Financial condition and operating performance of
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
the borrower
Portfolio yields
|
|
|
2% -19.00% (12.02%
|
)
|
|
Investment in Medallion Bank
|
|
|
290,548
|
|
|
Precedent M&A transactions
|
|
Price / Book Value multiples
|
|
|
2.1x to 2.5x
|
|
|
|
|
|
|
|
|
|
|
Price / Earnings multiples
|
|
|
8.7x to 10.6x
|
|
|
|
|
|
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
|
17.50%
|
|
|
|
|
|
|
|
|
|
|
Terminal value
|
|
$
|
470,964 to $623,007
|
|
|
Investment in Other Controlled Subsidiaries
|
|
|
4,623
|
|
|
Investee financial analysis
|
|
Financial condition and operating performance
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Enterprise value
|
|
$
|
37,500 - $41,500
|
|
|
|
|
|
|
|
|
|
|
Equity value
|
|
$
|
2,000 - $5,000
|
|
|
|
|
|
3,878
|
|
|
Investee book value adjusted for asset appreciation
|
|
Financial condition and operating performance of the investee
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Third party valuation/ offer to purchase asset
|
|
|
N/A
|
|
|
|
|
|
3,001
|
|
|
Investee book value adjusted for market appreciation
|
|
Financial condition and operating performance of the investee
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Third party offer to purchase investment
|
|
|
N/A
|
|
|
|
|
|
97
|
|
|
Investee book value and equity pickup
|
|
Financial condition and
operating
performance of the investee
|
|
|
N/A
|
|
|
Equity Investments
|
|
|
5,417
|
|
|
Investee financial analysis
|
|
Financial condition and operating performance of the borrower
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Collateral support
|
|
|
N/A
|
|
|
|
|
|
2,193
|
|
|
Investee financial analysis
|
|
Equity value
|
|
$
|
2,000 - $5,000
|
|
|
|
|
|
|
|
|
|
|
Preferred equity yield
|
|
|
12%
|
|
|
|
|
|
1,455
|
|
|
Precedent Market transaction
|
|
Offering price
|
|
$
|
8.73 / share
|
|
|
|
|
|
456
|
|
|
Investee book value
|
|
Valuation indicated by investee filings
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments Other Than Securities
|
|
|
7,450
|
|
|
Precedent market transaction
|
|
Transfer prices of Chicago medallions
|
|
|
N/A
|
|
|
|
|
|
|
|
|
Cash flow analysis
|
|
Discount rate in cash flow analysis
|
|
|
6%
|
|
|
Other Assets
|
|
|
339
|
|
|
Borrower collateral analysis
|
|
Adequacy of collateral (loan to value)
|
|
|
0%
|
|
(15) INVESTMENTS OTHER THAN SECURITIES
The following table presents the Company’s investments other than securities as of March 31, 2018 and December 31, 2017.
Page 35 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Type
(Dollars
in thousands)
|
|
Number of
Investments
|
|
|
Investment
Cost
|
|
|
Value as of
3/31/18
|
|
|
Value as of
12/31/17
|
|
|
City of Chicago Taxicab Medallions
|
|
|
154
|
(1)
|
|
$
|
8,411
|
|
|
$
|
5,378
|
(2)
|
|
$
|
7,238
|
(2)
|
|
City of Chicago Taxicab Medallions (handicap accessible)
|
|
|
5
|
(1)
|
|
|
278
|
|
|
|
157
|
(3)
|
|
|
212
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments Other Than Securities
|
|
|
|
|
|
$
|
8,689
|
|
|
$
|
5,535
|
|
|
$
|
7,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Investment is not readily marketable, is considered income producing, is not subject to option, and is a
non-qualifying
asset under the 1940 Act.
|
|
(2)
|
Gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation for Federal income tax purposes was $4,126, $0, and $4,126 as of March 31, 2018 and $5,846, $0, and $5,846 as of
December 31, 2017. The aggregate cost for Federal income tax purposes was $1,252 at March 31, 2018 and $1,392 at December 31, 2017.
|
|
(3)
|
Gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation for Federal income tax purposes was $123, $0, and $123 as of March 31, 2018 and $172, $0, and $172 as of
December 31, 2017. The aggregate cost for Federal income tax purposes was $35 at March 31, 2018 and $40 at December 31, 2017.
|
(16) SUBSEQUENT EVENTS
On April 2,
2018, the Company filed its withdrawal form of its BDC election with the SEC and as of that date will operate as a
non-
investment company. See also Note 3.
On May 1, 2018, a demand note with a maturity date of April 30, 2018 was extended to April 30, 2019.
Page 36 of 89
Medallion Financial Corp.
Consolidated Summary Schedule of Investments
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in thousands)
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2018
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
Medallion Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
334
|
|
|
|
46
|
%
|
|
|
4.33
|
%
|
|
$
|
6,892
|
|
|
$
|
142,439
|
|
|
$
|
140,661
|
|
|
$
|
121,090
|
|
|
|
|
Sean Cab Corp ##
|
|
|
Term Loan
|
|
|
|
12/09/11
|
|
|
|
11/23/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
4.63
|
%
|
|
|
|
|
|
$
|
3,131
|
|
|
$
|
3,131
|
|
|
$
|
3,131
|
|
|
|
|
Real Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
03/20/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
2,545
|
|
|
$
|
2,545
|
|
|
$
|
2,545
|
|
|
|
|
Real Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
03/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
350
|
|
|
$
|
350
|
|
|
$
|
350
|
|
|
|
|
Slo Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
03/20/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
1,527
|
|
|
$
|
1,527
|
|
|
$
|
1,527
|
|
|
|
|
Slo Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
03/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
210
|
|
|
$
|
210
|
|
|
$
|
210
|
|
|
|
|
Junaid Trans Corp ## & {Annually-Prime plus 1.00%}
|
|
|
Term Loan
|
|
|
|
04/30/13
|
|
|
|
04/29/19
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,373
|
|
|
$
|
1,373
|
|
|
$
|
1,373
|
|
|
|
|
Kby Taxi Inc ##
{One-Time-Prime
minus .75%}
|
|
|
Term Loan
|
|
|
|
01/29/18
|
|
|
|
01/28/23
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
$
|
1,326
|
|
|
$
|
1,320
|
|
|
$
|
1,319
|
|
|
$
|
1,321
|
|
|
|
|
Avi Taxi Corporation ##
{One-Time-Prime
minus .75%}
|
|
|
Term Loan
|
|
|
|
01/29/18
|
|
|
|
01/28/23
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
$
|
1,326
|
|
|
$
|
1,320
|
|
|
$
|
1,319
|
|
|
$
|
1,321
|
|
|
|
|
Anniversary Taxi Corp ##
{One-Time-Prime
minus .75%}
|
|
|
Term Loan
|
|
|
|
01/29/18
|
|
|
|
01/28/23
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
$
|
1,326
|
|
|
$
|
1,320
|
|
|
$
|
1,319
|
|
|
$
|
1,321
|
|
|
|
|
Apple Cab Corp ##
{One-Time-Prime
minus .75%}
|
|
|
Term Loan
|
|
|
|
01/29/18
|
|
|
|
01/28/23
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
$
|
1,326
|
|
|
$
|
1,320
|
|
|
$
|
1,319
|
|
|
$
|
1,321
|
|
|
|
|
Hj Taxi Corp ##
{One-Time-Prime
minus .75%}
|
|
|
Term Loan
|
|
|
|
01/29/18
|
|
|
|
01/28/23
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
$
|
1,326
|
|
|
$
|
1,320
|
|
|
$
|
1,319
|
|
|
$
|
1,321
|
|
|
|
|
Uddin Taxi Corp ## &
|
|
|
Term Loan
|
|
|
|
11/05/15
|
|
|
|
11/05/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.75
|
%
|
|
|
|
|
|
$
|
1,281
|
|
|
$
|
1,281
|
|
|
$
|
1,281
|
|
|
|
|
Waylon Transit LLC ##
|
|
|
Term Loan
|
|
|
|
09/27/17
|
|
|
|
09/27/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
1,267
|
|
|
$
|
1,267
|
|
|
$
|
1,269
|
|
|
|
|
Sonu-Seema Corp ## (interest rate includes deferred interest of 2.50%)
|
|
|
Term Loan
|
|
|
|
12/07/12
|
|
|
|
12/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,266
|
|
|
$
|
1,266
|
|
|
$
|
1,266
|
|
|
|
|
(deferred interest of $42 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bunty & Jyoti Inc ## (interest rate includes deferred interest of 2.50%)
|
|
|
Term Loan
|
|
|
|
03/13/13
|
|
|
|
12/13/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
|
|
(deferred interest of $43 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earie Hacking LLC ##
|
|
|
Term Loan
|
|
|
|
12/28/15
|
|
|
|
12/28/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.60
|
%
|
|
|
|
|
|
$
|
1,173
|
|
|
$
|
1,173
|
|
|
$
|
1,174
|
|
|
|
|
Yosi Transit Inc ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
03/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
1,018
|
|
|
$
|
1,018
|
|
|
$
|
1,018
|
|
|
|
|
Yosi Transit Inc ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
03/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
140
|
|
|
$
|
140
|
|
|
$
|
140
|
|
|
|
|
Ride Yellow LLC ## (interest rate includes deferred interest of 1.75%)
|
|
|
Term Loan
|
|
|
|
02/01/13
|
|
|
|
01/01/19
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,144
|
|
|
$
|
1,144
|
|
|
$
|
1,144
|
|
|
|
|
(deferred interest of $29 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miklos Hacking Corp ##
|
|
|
Term Loan
|
|
|
|
02/26/14
|
|
|
|
10/25/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.75
|
%
|
|
|
|
|
|
$
|
1,138
|
|
|
$
|
1,138
|
|
|
$
|
1,138
|
|
|
|
|
Cfn Cab Corp ##
|
|
|
Term Loan
|
|
|
|
02/26/14
|
|
|
|
10/25/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.75
|
%
|
|
|
|
|
|
$
|
1,138
|
|
|
$
|
1,138
|
|
|
$
|
1,138
|
|
|
|
|
Flow Taxi Corp ## & {Annually-Prime plus .25%}
|
|
|
Term Loan
|
|
|
|
06/27/16
|
|
|
|
07/01/21
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
1,108
|
|
|
$
|
1,108
|
|
|
$
|
1,110
|
|
|
|
|
Ukraine Service Co ## & {Annually-Prime plus .25%}
|
|
|
Term Loan
|
|
|
|
06/27/16
|
|
|
|
07/01/21
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.50
|
%
|
|
|
|
|
|
$
|
1,108
|
|
|
$
|
1,108
|
|
|
$
|
1,110
|
|
|
Various New York && ##
|
|
0.00% to 13.50% (interest rate includes deferred interest 1.00% to 3.25%)
|
|
|
Term Loan
|
|
|
|
03/23/01
to
03/28/18
|
|
|
|
05/28/16
to
12/21/26
|
|
|
|
311
|
|
|
|
35
|
%
|
|
|
4.39
|
%
|
|
$
|
262
|
|
|
$
|
113,672
|
|
|
$
|
111,899
|
|
|
$
|
92,311
|
|
|
|
|
(deferred interest of $1,514 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107
|
|
|
|
5
|
%
|
|
|
4.72
|
%
|
|
$
|
0
|
|
|
$
|
16,525
|
|
|
$
|
15,718
|
|
|
$
|
12,822
|
|
|
|
|
Sweetgrass Peach &Chadwick Cap ## & (interest rate includes deferred interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
08/28/12
|
|
|
|
02/24/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
6.00
|
%
|
|
|
|
|
|
$
|
1,353
|
|
|
$
|
1,353
|
|
|
$
|
1,353
|
|
|
|
|
(deferred interest of $37 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Various Chicago && ##
|
|
0.00% to 7.00% (interest rate includes deferred interest .75% to 2.75%)
|
|
|
Term Loan
|
|
|
|
01/22/10
to
08/08/16
|
|
|
|
03/12/16
to
12/22/20
|
|
|
|
106
|
|
|
|
4
|
%
|
|
|
4.60
|
%
|
|
$
|
0
|
|
|
$
|
15,172
|
|
|
$
|
14,365
|
|
|
$
|
11,469
|
|
|
|
|
(deferred interest of $255 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newark
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
|
|
|
|
8
|
%
|
|
|
5.38
|
%
|
|
$
|
0
|
|
|
$
|
21,400
|
|
|
$
|
21,316
|
|
|
$
|
20,435
|
|
|
|
|
Viergella Inc ## &
|
|
|
Term Loan
|
|
|
|
02/20/14
|
|
|
|
02/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.75
|
%
|
|
|
|
|
|
$
|
1,276
|
|
|
$
|
1,276
|
|
|
$
|
1,276
|
|
|
Various Newark && ##
|
|
4.50% to 7.00% (interest rate includes deferred interest 1.50%)
|
|
|
Term Loan
|
|
|
|
04/09/10
to
10/12/17
|
|
|
|
10/25/17
to
05/14/25
|
|
|
|
109
|
|
|
|
7
|
%
|
|
|
5.42
|
%
|
|
$
|
0
|
|
|
$
|
20,124
|
|
|
$
|
20,040
|
|
|
$
|
19,159
|
|
|
|
|
(deferred interest of $3 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boston && ##
|
|
2.75% to 6.15%
|
|
|
Term Loan
|
|
|
|
06/12/07
to
10/04/17
|
|
|
|
12/07/15
to
11/06/25
|
|
|
|
58
|
|
|
|
2
|
%
|
|
|
4.41
|
%
|
|
$
|
0
|
|
|
$
|
6,692
|
|
|
$
|
6,304
|
|
|
$
|
6,068
|
|
|
Cambridge && ##
|
|
3.75% to 5.50%
|
|
|
Term Loan
|
|
|
|
05/06/11
to
12/15/15
|
|
|
|
03/29/16
to
01/26/20
|
|
|
|
13
|
|
|
|
0
|
%
|
|
|
4.49
|
%
|
|
$
|
0
|
|
|
$
|
354
|
|
|
$
|
309
|
|
|
$
|
315
|
|
|
Various Other && ##
|
|
4.75% to 9.00%
|
|
|
Term Loan
|
|
|
|
04/28/08
to
07/30/15
|
|
|
|
01/03/17
to
09/01/23
|
|
|
|
8
|
|
|
|
0
|
%
|
|
|
7.95
|
%
|
|
$
|
0
|
|
|
$
|
442
|
|
|
$
|
421
|
|
|
$
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total medallion loans ($152,106 pledged as collateral under borrowing arrangements)
2
|
|
|
|
|
|
|
|
|
|
|
|
630
|
|
|
|
61
|
%
|
|
|
4.50
|
%
|
|
$
|
6,892
|
|
|
$
|
187,852
|
|
|
$
|
184,729
|
|
|
$
|
161,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured mezzanine
Secured mezzanine (21% North Carolina, 16% Minnesota, 9%
Kansas, 6% Delaware, 5% California, 5% Texas, 5% Oklahoma, 5% Ohio, 4% Oregon, 4% North Dakota, 4% Pennsylvania, and 16% all other states)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing (39% of the total)
|
|
Innovative Metal, Inc. dba Southwest Data Products (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
04/06/17
|
|
|
|
04/06/24
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
$
|
4,980
|
|
Page 37 of 89
Medallion Financial Corp.
Consolidated Summary Schedule of Investments
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2018
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
|
|
|
|
3P Acquisition Inc. (interest rate includes PIK interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
03/26/18
|
|
|
|
09/26/23
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
13.00
|
%
|
|
$
|
4,500
|
|
|
$
|
4,501
|
|
|
$
|
4,501
|
|
|
$
|
4,501
|
|
|
|
|
|
|
(capitalized interest of $1 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stride Tool Holdings, LLC (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
04/05/16
|
|
|
|
04/05/21
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
4,248
|
|
|
$
|
4,248
|
|
|
$
|
4,213
|
|
|
|
|
|
|
(capitalized interest of $249 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AA Plush Holdings, LLC (interest rate includes PIK interest of 6.00%)
|
|
|
Term Loan
|
|
|
|
08/15/14
|
|
|
|
08/15/19
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
3,448
|
|
|
$
|
3,448
|
|
|
$
|
3,444
|
|
|
|
|
|
|
(capitalized interest of $448 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pinnacle Products International, Inc. (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
10/09/15
|
|
|
|
03/22/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
3,268
|
|
|
$
|
3,268
|
|
|
$
|
3,268
|
|
|
|
|
|
|
(capitalized interest of $468 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Paper Products Acquisition, LLC (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
06/09/16
|
|
|
|
06/09/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
3,112
|
|
|
$
|
3,112
|
|
|
$
|
3,112
|
|
|
|
|
|
|
(capitalized interest of $117 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMI Porta Opco, LLC (interest rate includes PIK interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
12/11/17
|
|
|
|
03/11/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
3,009
|
|
|
$
|
3,009
|
|
|
$
|
3,008
|
|
|
|
|
|
|
(capitalized interest of $9 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BB Opco, LLC d/b/a BreathableBaby, LLC (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
08/01/14
|
|
|
|
08/01/19
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
2,739
|
|
|
$
|
2,739
|
|
|
$
|
2,739
|
|
|
|
|
|
|
(capitalized interest of $239 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tri-Tech
Forensics, Inc. (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
06/15/17
|
|
|
|
06/15/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
|
|
|
|
|
American Cylinder, Inc. d/b/a All Safe (interest rate includes PIK interest of 7.00%)
|
|
|
Term Loan
|
|
|
|
07/03/13
|
|
|
|
09/30/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
19.00
|
%
|
|
|
|
|
|
$
|
1,813
|
|
|
$
|
1,813
|
|
|
$
|
1,813
|
|
|
|
|
|
|
(capitalized interest of $313 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orchard Holdings, Inc. &
|
|
|
Term Loan
|
|
|
|
03/10/99
|
|
|
|
03/31/10
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
1,390
|
|
|
$
|
1,390
|
|
|
$
|
1,390
|
|
|
|
|
|
|
Filter Holdings, Inc. (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
05/05/17
|
|
|
|
05/05/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
|
|
|
|
Various Other 10.00%
|
|
|
Term Loan
|
|
|
|
03/28/17
|
|
|
|
03/31/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
10.00
|
%
|
|
|
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Arts, Entertainment, and Recreation (18% of the total)
|
|
|
|
RPAC Racing, LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
11/27/17
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
3
|
%
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
7,868
|
|
|
$
|
7,827
|
|
|
$
|
7,828
|
|
|
|
|
|
|
(capitalized interest of $15 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing, LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
11/19/10
|
|
|
|
03/30/20
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
5,611
|
|
|
$
|
5,611
|
|
|
$
|
5,611
|
|
|
|
|
|
|
(capitalized interest of $2,572 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing, LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
06/22/16
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
2,278
|
|
|
$
|
2,034
|
|
|
$
|
2,034
|
|
|
|
|
|
|
(capitalized interest of $278 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing, LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
09/14/16
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
1,120
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
|
|
|
|
(capitalized interest of $120 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional, Scientific, and Technical Services (16% of the total)
|
|
|
|
Weather Decision Technologies, Inc. (interest rate includes PIK interest of 9.00%)
|
|
|
Term Loan
|
|
|
|
12/11/15
|
|
|
|
12/11/20
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
18.00
|
%
|
|
|
|
|
|
$
|
4,317
|
|
|
$
|
4,317
|
|
|
$
|
4,310
|
|
|
|
|
|
|
(capitalized interest of $817 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather Decision Technologies, Inc. (interest rate includes PIK interest of 7.00%)
|
|
|
Term Loan
|
|
|
|
11/08/17
|
|
|
|
06/30/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
384
|
|
|
$
|
384
|
|
|
$
|
384
|
|
|
|
|
|
|
(capitalized interest of $9 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADSCO Opco, LLC (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
10/25/16
|
|
|
|
10/25/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
3,706
|
|
|
$
|
3,706
|
|
|
$
|
3,697
|
|
|
|
|
|
|
(capitalized interest of $106 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northern Technologies, LLC (interest rate includes PIK interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
01/29/16
|
|
|
|
01/29/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
3,679
|
|
|
$
|
3,679
|
|
|
$
|
3,678
|
|
|
|
|
|
|
(capitalized interest of $79 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+
|
|
Portu-Sunberg Marketing LLC
|
|
|
Term Loan
|
|
|
|
10/21/16
|
|
|
|
02/21/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
12.00
|
%
|
|
|
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
1,245
|
|
|
|
|
+
|
|
Various Other 12.00% to 14.00%
|
|
|
Term Loan
|
|
|
|
12/01/14
05/21/15
|
|
|
|
05/21/22
04/02/23
|
|
|
|
2
|
|
|
|
1
|
%
|
|
|
12.93
|
%
|
|
$
|
0
|
|
|
$
|
1,871
|
|
|
$
|
1,871
|
|
|
$
|
1,869
|
|
|
|
|
|
|
(capitalized interest of $16 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information (9% of the total)
|
|
|
|
US Internet Corp.
|
|
|
Term Loan
|
|
|
|
03/14/17
|
|
|
|
03/14/22
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
14.50
|
%
|
|
|
|
|
|
$
|
4,075
|
|
|
$
|
4,075
|
|
|
$
|
4,063
|
|
|
|
|
|
|
US Internet Corp. (interest rate includes PIK interest of 17.00%)
|
|
|
Term Loan
|
|
|
|
03/14/17
|
|
|
|
03/14/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
19.00
|
%
|
|
|
|
|
|
$
|
1,717
|
|
|
$
|
1,717
|
|
|
$
|
1,717
|
|
|
|
|
|
|
(capitalized interest of $217 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Centare Holdings, Inc.
|
|
|
Term Loan
|
|
|
|
08/30/13
|
|
|
|
08/30/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
|
$
|
2,498
|
|
Page 38 of 89
Medallion Financial Corp.
Consolidated Summary Schedule of Investments
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2018
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
Wholesale Trade (6% of the total)
|
|
+
|
|
Classic Brands, LLC
|
|
|
Term Loan
|
|
|
|
01/08/16
|
|
|
|
04/30/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
12.00
|
%
|
|
|
|
|
|
$
|
2,880
|
|
|
$
|
2,880
|
|
|
$
|
2,880
|
|
|
|
|
|
|
Harrell’s Car Wash Systems, Inc. (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
07/03/17
|
|
|
|
09/03/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
2,551
|
|
|
$
|
2,551
|
|
|
$
|
2,548
|
|
|
|
|
|
|
(capitalized interest of $51 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining, Quarrying, and Oil and Gas Extraction (4% of the total)
|
|
|
|
Green Diamond Performance Materials, Inc. (interest rate includes PIK interest of 4.50%)
|
|
|
Term Loan
|
|
|
|
09/08/17
|
|
|
|
09/08/24
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
16.50
|
%
|
|
|
|
|
|
$
|
4,102
|
|
|
$
|
4,102
|
|
|
$
|
4,102
|
|
|
|
|
|
|
(capitalized interest of $103 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation and Warehousing (4% of the total)
|
|
|
|
LLL Transport, Inc. (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
10/23/15
|
|
|
|
04/23/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
3,944
|
|
|
$
|
3,944
|
|
|
$
|
3,942
|
|
|
|
|
|
|
(capitalized interest of $439 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care and Social Assistance (2% of the total)
|
|
|
|
Emes Professional Associates, Inc.
|
|
|
Term Loan
|
|
|
|
01/26/18
|
|
|
|
07/26/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
12.00
|
%
|
|
$
|
1,700
|
|
|
$
|
1,700
|
|
|
$
|
1,700
|
|
|
$
|
1,700
|
|
|
Construction (2% of the total)
|
|
|
|
Highland
Crossing-M,
LLC
|
|
|
Term Loan
|
|
|
|
01/07/15
|
|
|
|
02/01/25
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
11.50
|
%
|
|
|
|
|
|
$
|
1,443
|
|
|
$
|
1,443
|
|
|
$
|
1,442
|
|
|
Accommodation and Food Services (0% of the total)
|
|
|
|
Various Other 9.25%
|
|
|
Term Loan
|
|
|
|
11/05/10
|
|
|
|
11/05/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
9.25
|
%
|
|
|
|
|
|
$
|
213
|
|
|
$
|
213
|
|
|
$
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total secured mezzanine
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
35
|
%
|
|
|
12.14
|
%
|
|
$
|
6,200
|
|
|
$
|
93,187
|
|
|
$
|
92,782
|
|
|
$
|
92,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other secured commercial (85% New Jersey, 8% Illinois, 6% Massachusetts and 1% all
other states)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Trade (58% of the total)
|
|
|
|
Various Other && 4.75% to 10.50%
|
|
|
Term Loan
|
|
|
|
10/28/08
to
12/23/15
|
|
|
|
05/09/18
to
03/03/20
|
|
|
|
5
|
|
|
|
*
|
|
|
|
7.70
|
%
|
|
|
|
|
|
$
|
760
|
|
|
$
|
717
|
|
|
$
|
545
|
|
|
Accommodation and Food Services (28% of the total)
|
|
|
|
Various Other && 6.75% to 9.00%
|
|
|
Term Loan
|
|
|
|
11/29/05
to
06/06/14
|
|
|
|
04/18/17
to
09/06/19
|
|
|
|
3
|
|
|
|
*
|
|
|
|
8.13
|
%
|
|
|
|
|
|
$
|
634
|
|
|
$
|
578
|
|
|
$
|
265
|
|
|
Transportation and Warehousing (8% of the total)
|
|
|
|
Various Other && 4.25% 4.25%
|
|
|
Term Loan
|
|
|
|
03/17/15
|
|
|
|
09/10/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.25
|
%
|
|
|
|
|
|
$
|
75
|
|
|
$
|
74
|
|
|
$
|
75
|
|
|
Real Estate and Rental and Leasing (6% of the total)
|
|
|
|
Various Other && 5.00% 5.00%
|
|
|
Term Loan
|
|
|
|
03/31/15
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
69
|
|
|
$
|
65
|
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Commercial Loans (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
0
|
%
|
|
|
7.37
|
%
|
|
|
|
|
|
$
|
1,538
|
|
|
$
|
1,434
|
|
|
$
|
941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial loans
(2)
|
|
|
|
44
|
|
|
|
35
|
%
|
|
|
12.07
|
%
|
|
$
|
6,200
|
|
|
$
|
94,725
|
|
|
$
|
94,216
|
|
|
$
|
93,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Medallion Bank and other controlled subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking
|
|
|
|
Medallion Bank **
|
|
|
100% of common
stock
|
|
|
|
05/16/02
|
|
|
|
None
|
|
|
|
1
|
|
|
|
121
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
128,052
|
|
|
$
|
320,143
|
|
|
NASCAR Race Team
|
|
|
|
Medallion MotorSports, LLC
|
|
|
75% of LLC units
|
|
|
|
11/24/10
|
|
|
|
None
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
42.40
|
%
|
|
|
|
|
|
|
|
|
|
$
|
2,820
|
|
|
$
|
4,620
|
|
|
Art Dealer
|
|
|
|
Medallion Fine Art, Inc.
|
|
|
100% of common
stock
|
|
|
|
12/03/12
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
1,866
|
|
|
$
|
3,440
|
|
|
Loan Servicing
|
|
|
|
Medallion Servicing Corp.
|
|
|
100% of common
stock
|
|
|
|
11/05/10
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
394
|
|
|
$
|
394
|
|
|
Professional Sports Team
|
|
|
|
LAX Group LLC
|
|
|
44.97% of
membership
interests
|
|
|
|
05/23/12
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
322
|
|
|
$
|
2,572
|
|
|
Media
|
|
|
|
Medallion Taxi Media, Inc.
|
|
|
100% of common
stock
|
|
|
|
01/01/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Medallion Bank and other controlled subsidiaries, net
|
|
|
|
|
|
|
|
6
|
|
|
|
125
|
%
|
|
|
0.90
|
%
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
133,454
|
|
|
$
|
331,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Finance
|
|
|
|
Convergent Capital, Ltd **
|
|
|
7% of limited
partnership interest
|
|
|
|
07/20/07
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
733
|
|
|
$
|
456
|
|
|
NASCAR Race Team
|
|
|
|
Rpac Racing LLC
|
|
|
1,000 shares of
Series D
|
|
|
|
08/25/15
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
1,195
|
|
|
Loan Servicing
|
|
|
|
Upgrade, Inc.
|
|
|
666,668 shares of Series
A-1
preferred stock
|
|
|
|
09/30/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
250
|
|
|
$
|
1,455
|
|
|
Advertising Services
|
|
|
|
ADSCO Holdco, LLC
|
|
|
7.7% Class A Series
A-2
Units
|
|
|
|
10/25/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
400
|
|
|
$
|
400
|
|
Page 39 of 89
Medallion Financial Corp.
Consolidated Summary Schedule of Investments
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2018
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
Baby Sleep Products
|
|
|
|
VisioCap BB Acquisition, LLC
|
|
3.6%
Class A-2
Units
|
|
|
08/01/14
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
250
|
|
|
$
|
250
|
|
|
Car Wash Equipment Manufacturer
|
|
|
|
Harrell’s Car Wash Systems, Inc.
|
|
0.9% Common Stock
|
|
|
07/03/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
104
|
|
|
$
|
104
|
|
|
Elevator Parts Manufacturer
|
|
|
|
EMI Porta HoldCo, LLC
|
|
3.6% Series
A-2
Preferred Units
|
|
|
12/11/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Engineering Design Services
|
|
|
|
DPI Acquisition, LLC
|
|
Warrant for 180,000 Class C units
|
|
|
12/01/14
|
|
|
|
5th
anniversary
of note paid
in full
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Environmental Consulting Services
|
|
|
|
NTI Investment Group, LLC
|
|
8.3%
Class A-1
Units
|
|
|
01/29/2016,
12/5/16 &
6/12/17
|
|
|
|
None
|
|
|
|
3
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
408
|
|
|
$
|
408
|
|
|
Forensic Supplies
|
|
|
|
TTFI Holdings, Inc.
|
|
4.9% Fully Diluted, 4.9% Common Stock; 5.0% Preferred Stock
|
|
|
06/15/17
|
|
|
|
None
|
|
|
|
2
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
192
|
|
|
$
|
192
|
|
|
Hand Tool Manufacturer
|
|
|
|
Stride Tool Holdings, LLC
|
|
7.1% of LLC units
|
|
|
04/05/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Industrial Filters Manufacturer
|
|
|
|
Filter Holdings, Inc.
|
|
7.1% Fully Diluted, 7.1% Preferred Stock, 7.1% Common Stock
|
|
|
05/05/17
|
|
|
|
None
|
|
|
|
2
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
207
|
|
|
$
|
207
|
|
|
IT Services
|
|
|
|
Centare Holdings, Inc.
|
|
11.1% Fully Diluted, 3.9% Preferred Stock, 7.2% Common Stock
|
|
|
08/30/13
|
|
|
|
None
|
|
|
|
2
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
104
|
|
|
$
|
104
|
|
|
Marketing Services
|
|
|
|
Portu-Sunberg Marketing LLC
|
|
0.9% LLC units
|
|
|
10/19/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
50
|
|
|
$
|
50
|
|
|
|
|
|
|
Portu-Sunberg Marketing LLC
|
|
Warrant for 195,000 Class E Units
|
|
|
12/31/12
|
|
|
|
07/24/20
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal finishing Services
|
|
|
|
3P Acquisition Inc.
|
|
5.0% Common Stock
|
|
|
03/26/18
|
|
|
|
None
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
$
|
500
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paper Tapes Manufacturer
|
|
|
|
Liberty Paper Products Acquisition, LLC
|
|
12% Series
A-2
Preferred Units
|
|
|
06/09/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
534
|
|
|
$
|
534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pathology Laboratory
|
|
|
|
Emes Professional Associates, Inc.
|
|
1.7% Preferred Stock, 3.5% Common Stock
|
|
|
01/26/18
|
|
|
|
None
|
|
|
|
2
|
|
|
|
|
|
|
|
0.00
|
%
|
|
$
|
250
|
|
|
|
|
|
|
$
|
250
|
|
|
$
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheet Metal Manufacturer
|
|
|
|
SWDP Acquisition Co., LLC
|
|
10% Common Units
|
|
|
04/06/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
400
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Space Heater Manufacturer
|
|
|
|
Pinnacle Investment Corp.
|
|
0.6% Common Stock
|
|
|
10/09/15
|
|
|
|
None
|
|
|
|
1
|
|
|
|
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
135
|
|
|
$
|
135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Sand Products
|
|
|
|
Green Diamond HoldCo, Inc.
|
|
4.3% Series A Preferred Stock
|
|
|
09/08/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Stuffed Toy Manufacturer
|
|
|
|
AA Plush Holdings, LLC
|
|
4.0% Series
A-2
Units
|
|
|
08/15/14
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
300
|
|
|
$
|
300
|
|
|
Weather Forecasting Services
|
|
|
|
Weather Decision Technologies, Inc.
|
|
2.2% Preferred Stock
|
|
|
12/11/15
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Wholesale Hobbyists’ Supplies
|
|
|
|
Classic Brands, LLC
|
|
Warrant for 300,000 Class A units
|
|
|
01/08/16
|
|
|
|
01/08/26
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Various Other #
|
|
+
|
|
**
|
|
* Various
|
|
|
08/04/08 to
05/21/15
|
|
|
|
None to
2/5/23
|
|
|
|
5
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
818
|
|
|
$
|
818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
|
|
|
|
4
|
%
|
|
|
0.00
|
%
|
|
$
|
750
|
|
|
$
|
0
|
|
|
$
|
7,335
|
|
|
$
|
9,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
%
|
|
|
0.00
|
%
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investments ($152,106 pledged as collateral under borrowing arrangements)
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
715
|
|
|
|
225
|
%
|
|
|
4.97
|
%
|
|
$
|
13,842
|
|
|
$
|
282,577
|
|
|
$
|
419,734
|
|
|
$
|
595,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 40 of 89
|
(1)
|
Represents the actual or weighted average interest or dividend rate of the respective security or portfolio as of the date indicated. Investments without an interest rate or with a rate of 0.00% are considered
non-income
producing.
|
|
(2)
|
Included in secured mezzanine commercial loans and other commercial loans was $6,666 of interest income capitalized into the outstanding investment balances, and $1,923 of deferred interest income, in accordance with
the terms of the investment contract.
|
|
(3)
|
The ratio of restricted securities fair value to net assets is 225%.
|
|
(4)
|
Gross unrealized appreciation, gross unrealized depreciation and net appreciation for federal income tax purposes totaled $248,658, $24,569 and $224,089, respectively. The tax cost of investments was $371,313.
|
|
(5)
|
For revolving lines of credit the amount shown is the cost at March 31, 2018.
|
|
**
|
Not an eligible portfolio company as such term is defined in Section 2(a)(46) of the 1940 Act. Under the 1940 Act, we may not acquire any
non-qualifying
assets, unless at the
time such acquisition is made, qualifying assets, which include securities of eligible portfolio companies, represent at least 70% of our total assets. The status of these assets under the 1940 Act are subject to change. We monitor the status of
these assets on an ongoing basis.
|
|
&
|
Loan is on nonaccrual status, or past due on contractual payments, and is therefore considered
non-income
producing.
|
|
&&
|
Some or all of the securities are
non-income
producing as per & above.
|
|
#
|
Publicly traded but sales subject to applicable Rule 144 limitations.
|
|
##
|
Pledged as collateral under borrowing arrangements.
|
|
+
|
Includes various warrants, all of which have a cost and fair value of zero at March 31, 2018.
|
|
|
|
The Summary Schedule of Investments does not reflect the Company’s complete portfolio holdings. It includes the Company’s 50 largest holdings and each investment of any issuer that exceeds 1% of the Company’s net
assets. “Various Other” represents all issues not required to be disclosed under the rules adopted by the U.S. Securities and Exchange Commission (“SEC”). Footnotes above may apply to securities that are included in “Various
Other”. For further detail, the complete schedule of portfolio holdings is available (i) without charge, upon request, by calling (877) MEDALLION; and (ii) on the SEC’s website at http://www.sec.gov. Filed as Exhibit 99.1 to
the Quarterly Report on Form
10-Q
for the quarter ended March 31, 2018, filed on May 15, 2018 (File No. 001-37747)
|
Page 41 of 89
Medallion Financial Corp
CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
As of and for the quarter ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of issuer and title of issue
(Dollars in thousands)
|
|
Number of shares (all restricted unless
otherwise noted)
|
|
Equity in
net profit
and (loss)
|
|
|
Amount of
dividends
or interest
(1)
|
|
|
Value as of
3/31/18
|
|
|
Medallion Bank – common stock
|
|
1,000,000 shares - 100% of common stock
|
|
$
|
30,000
|
|
|
$
|
0
|
|
|
$
|
320,143
|
|
|
Medallion Motorsports, LLC – membership interest
(2)
|
|
75% of membership interest
|
|
|
(3
|
)
|
|
|
0
|
|
|
|
4,620
|
|
|
Medallion Fine Art, Inc. – common
stock
(3)
|
|
1,000 shares - 100% of common stock
|
|
|
(437
|
)
|
|
|
0
|
|
|
|
3,716
|
|
|
LAX Group LLC – membership interest
|
|
45% of membership interest
|
|
|
(529
|
)
|
|
|
0
|
|
|
|
2,572
|
|
|
Medallion Servicing Corp. – common stock
|
|
1,000 shares - 100% of common stock
|
|
|
84
|
|
|
|
0
|
|
|
|
118
|
|
|
Medallion Taxi Media, Inc. – common stock
|
|
1,000 shares - 100% of common stock
|
|
|
0
|
|
|
|
28
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments in Medallion Bank and other controlled subsidiaries
|
|
|
|
|
29,115
|
|
|
|
28
|
|
|
|
331,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing LLC
(2)
|
|
100% of Series D units
|
|
|
0
|
|
|
|
0
|
|
|
|
1,195
|
|
|
Stride Tool Holding LLC – membership interest
(4)
|
|
7.1% of Series A membership interest
|
|
|
0
|
|
|
|
0
|
|
|
|
500
|
|
|
3P Acquisition, Inc.
(5)
|
|
5% of common stock
|
|
|
0
|
|
|
|
0
|
|
|
|
500
|
|
|
NTI Investment Group, LLC – membership interest
(6)
|
|
8.3% of membership interest
|
|
|
0
|
|
|
|
0
|
|
|
|
408
|
|
|
ADSCO Holdco LLC – membership
interest
(7)
|
|
7.7% of Class A Series
A-2
LLC units
|
|
|
0
|
|
|
|
0
|
|
|
|
400
|
|
|
SWDP Acquisition Co LLC.
(8)
|
|
10% of membership interest
|
|
|
0
|
|
|
|
0
|
|
|
|
400
|
|
|
Filter Holdings INC.
(9)
|
|
7.1% of common & preferred stock
|
|
|
0
|
|
|
|
0
|
|
|
|
207
|
|
|
Third Century JRT, Inc.
(10)
|
|
20% of common stock
|
|
|
0
|
|
|
|
0
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity investments in affiliates
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Investments with an amount of $0 are considered
non-income
producing.
|
|
(2)
|
The Company and a controlled subsidiary of the Company have 4 loans due from RPAC Racing LLC, an affiliate of Medallion Motorsports, LLC in the amount of $16,472 as of March 31, 2018, and on which $0 of interest
income was earned during the quarter ended March 31, 2018.
|
|
(3)
|
The Company has a loan due from Medallion Fine Art, Inc. which was paid in full during the quarter ended March 31, 2018, on which $10 of interest income was earned during the quarter ended March 31, 2018.
|
|
(4)
|
The Company has a loan due from Stride Tool Holding LLC in the amount of $4,249 as of March 31, 2018, and on which $159 of interest income was earned during the quarter ended March 31, 2018.
|
|
(5)
|
The Company has a loan due from 3P Acquisition Inc. in the amount of $4,501 as of March 31, 2018, and on which $10 of interest income was earned during the quarter ended March 31, 2018.
|
|
(6)
|
The Company has a loan due from Northern Technologies LLC in the amount of $3,679 as of March 31, 2018, and on which $118 of interest income was earned during the quarter ended March 31, 2018.
|
|
(7)
|
The Company has a loan due from ADSCO Holdco LLC in the amount of $3,706 as of March 31, 2018, and on which $117 of interest income was earned during the quarter ended March 31, 2018.
|
|
(8)
|
The Company has a loan due from Innovative Metal Inc., and affiliate of SWDP Acquisition Co LLC in the amount of $5,000 as of March 31, 2018, on which $175 of interest income was earned during the quarter ended
March 31, 2018.
|
|
(9)
|
The Company has a loan due from Filter Holdings Inc in the amount of $1,250 as of March 31, 2018, on which $44 of interest income was earned during the quarter ended March 31, 2018.
|
|
(10)
|
The Company has a loan due from JR Thompson Company LLC, an affiliate of Third Century JRT, Inc., in the amount of $871 as of March 31, 2018, on which $31 of interest income was earned during the quarter ended
March 31, 2018.
|
Page 42 of 89
The table below provides a recap of the changes in the investment in the respective issuers for the quarter ended
March 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Issuer
|
|
Medallion
Bank
|
|
|
Medallion
Fine Art,
Inc.
(1)
|
|
|
Medallion
Motorsports,
LLC
(2)
|
|
|
Medallion
Servicing
Corp.
|
|
|
LAX
Group, LLC
|
|
|
Medallion
Taxi Media,
Inc.
|
|
|
Third
Century
JRT,
Inc.
(3)
|
|
|
NTI
Investment
Group,
LLC
(4)
|
|
|
Stride Tool
Holding
LLC
(5)
|
|
|
ADSCO Holdco
LLC
(6)
|
|
|
RPAC Racing
LLC
(2)
|
|
|
Filter
Holdings
Inc.
(7)
|
|
|
SWDP
ACQUISITION
Co LLC
(8)
|
|
|
3P
Acquisition
Inc.
(9)
|
|
|
Title of Issue
|
|
Common
Stock
|
|
|
Common
Stock
|
|
|
Membership
Interest
|
|
|
Common
Stock
|
|
|
Membership
Interest
|
|
|
Common
Stock
|
|
|
Common
Stock
|
|
|
Membership
Interest
|
|
|
Membership
Interest
|
|
|
Membership
Interest
|
|
|
Membership
Interest
|
|
|
Common &
Preferred
Stock
|
|
|
Membership
Interest
|
|
|
Common
Stock
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value as of
12/31/17
|
|
$
|
290,548
|
|
|
$
|
3,878
|
|
|
$
|
4,623
|
|
|
$
|
97
|
|
|
$
|
3,001
|
|
|
$
|
—
|
|
|
$
|
200
|
|
|
$
|
408
|
|
|
$
|
500
|
|
|
$
|
400
|
|
|
$
|
2,193
|
|
|
$
|
207
|
|
|
$
|
400
|
|
|
$
|
—
|
|
|
Gross additions / investments
|
|
|
—
|
|
|
|
275
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
|
Gross reductions / distributions
|
|
|
(405
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(63
|
)
|
|
|
—
|
|
|
|
(28
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net equity in profit and loss, and unrealized appreciation and (depreciation)
|
|
|
30,000
|
|
|
|
(437
|
)
|
|
|
(3
|
)
|
|
|
84
|
|
|
|
(529
|
)
|
|
|
28
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(998
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value as of
3/31/18
|
|
$
|
320,143
|
|
|
$
|
3,716
|
|
|
$
|
4,620
|
|
|
$
|
118
|
|
|
$
|
2,572
|
|
|
$
|
—
|
|
|
$
|
200
|
|
|
$
|
408
|
|
|
$
|
500
|
|
|
$
|
400
|
|
|
$
|
1,195
|
|
|
$
|
207
|
|
|
$
|
400
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Company has a loan due from Medallion Fine Art, Inc. which was paid in full during the quarter ended March 31, 2018.
|
|
(2)
|
In addition to the equity ownership, the Company and a controlled subsidiary of the Company have four loans due from RPAC Racing LLC, an affiliate of Medallion Motorsports, LLC, in the amount of $16,472.
|
|
(3)
|
The Company has a loan due from J. R. Thompson Company, LLC, an affiliate of Third Century JRT, Inc in the amount of $871 as of March 31, 2018, $285 of which was repaid during 2018.
|
|
(4)
|
The Company has a loan due from Northern Technologies LLC in the amount of $3,679 as of March 31, 2018, $9 of which was advanced during 2018.
|
|
(5)
|
The Company has a loan due from Stride Tool Holdings LLC in the amount of $4,249 as of March 31, 2018, $33 of which was advanced during 2018.
|
|
(6)
|
The Company has a loan due from ADSCO Holdco LLC in the amount of $3,706 as of March 31, 2018, $19 of which was advanced during 2018.
|
|
(7)
|
The Company has a loan due from Filter Holdings Inc. in the amount of $1,250 as of March 31, 2018, with no changes in 2018.
|
|
(8)
|
The Company has a loan due from Innovative Metals, Inc., an affiliate of SWDP Acquisition Co LLC in the amount of $5,000 as of March 31, 2018, with no changes in 2018.
|
|
(9)
|
The Company has a loan due from 3P Acquisition Inc. in the amount of $4,501 as of March 31, 2018, all of which was advanced during 2018.
|
Page 43 of 89
Medallion Financial Corp.
Consolidated Summary Schedule of Investments
December 31, 2017
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
|
(Dollars in
thousands)
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2017
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
Medallion Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350
|
|
|
|
53
|
%
|
|
|
4.23
|
%
|
|
$
|
10,898
|
|
|
$
|
168,710
|
|
|
$
|
167,226
|
|
|
$
|
151,309
|
|
|
|
|
Sean Cab Corp ##
|
|
|
Term Loan
|
|
|
|
12/09/11
|
|
|
|
11/23/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
4.63
|
%
|
|
|
|
|
|
$
|
3,159
|
|
|
$
|
3,159
|
|
|
$
|
3,159
|
|
|
|
|
Real Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
12/20/17
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
2.81
|
%
|
|
|
|
|
|
$
|
2,545
|
|
|
$
|
2,545
|
|
|
$
|
2,545
|
|
|
|
|
Real Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
12/20/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.81
|
%
|
|
|
|
|
|
$
|
350
|
|
|
$
|
350
|
|
|
$
|
350
|
|
|
|
|
Slo Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
12/20/17
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
2.81
|
%
|
|
|
|
|
|
$
|
1,527
|
|
|
$
|
1,527
|
|
|
$
|
1,527
|
|
|
|
|
Slo Cab Corp ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
12/20/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.81
|
%
|
|
|
|
|
|
$
|
210
|
|
|
$
|
210
|
|
|
$
|
210
|
|
|
|
|
Junaid Trans Corp ## & {Annually-Prime plus 1.00%}
|
|
|
Term Loan
|
|
|
|
04/30/13
|
|
|
|
04/29/19
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,379
|
|
|
$
|
1,379
|
|
|
$
|
1,379
|
|
|
|
|
Avi Taxi Corporation ##
|
|
|
Term Loan
|
|
|
|
04/11/14
|
|
|
|
12/10/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
|
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
|
|
Hj Taxi Corp ##
|
|
|
Term Loan
|
|
|
|
04/11/14
|
|
|
|
12/10/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
|
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
|
|
Anniversary Taxi Corp ##
|
|
|
Term Loan
|
|
|
|
04/11/14
|
|
|
|
12/10/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
|
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
|
|
Kby Taxi Inc ##
|
|
|
Term Loan
|
|
|
|
04/11/14
|
|
|
|
12/10/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
|
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
|
|
Apple Cab Corp ##
|
|
|
Term Loan
|
|
|
|
04/11/14
|
|
|
|
12/10/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.25
|
%
|
|
|
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
$
|
1,329
|
|
|
|
|
Penegali Taxi LLC ##
|
|
|
Term Loan
|
|
|
|
12/11/14
|
|
|
|
12/10/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.75
|
%
|
|
|
|
|
|
$
|
1,294
|
|
|
$
|
1,294
|
|
|
$
|
1,294
|
|
|
|
|
Uddin Taxi Corp ## &
|
|
|
Term Loan
|
|
|
|
11/05/15
|
|
|
|
11/05/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.75
|
%
|
|
|
|
|
|
$
|
1,284
|
|
|
$
|
1,284
|
|
|
$
|
1,284
|
|
|
|
|
Waylon Transit LLC ##
|
|
|
Term Loan
|
|
|
|
09/27/17
|
|
|
|
09/27/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
1,275
|
|
|
$
|
1,275
|
|
|
$
|
1,275
|
|
|
$
|
1,277
|
|
|
|
|
Sonu-Seema Corp ## (interest rate includes deferred interest of 2.50%)
|
|
|
Term Loan
|
|
|
|
12/07/12
|
|
|
|
12/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,275
|
|
|
$
|
1,275
|
|
|
$
|
1,275
|
|
|
|
|
(deferred interest of $34 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bunty & Jyoti Inc ## (interest rate includes deferred interest of 2.50%)
|
|
|
Term Loan
|
|
|
|
03/13/13
|
|
|
|
12/13/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
1,259
|
|
|
$
|
1,259
|
|
|
$
|
1,259
|
|
|
|
|
(deferred interest of $35 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perem Hacking Corp ## & {Annually-Prime plus .25%}
|
|
|
Term Loan
|
|
|
|
05/01/16
|
|
|
|
05/01/21
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.25
|
%
|
|
|
|
|
|
$
|
1,223
|
|
|
$
|
1,223
|
|
|
$
|
1,225
|
|
|
|
|
S600 Service Co Inc ## & {Annually-Prime plus .25%}
|
|
|
Term Loan
|
|
|
|
05/01/16
|
|
|
|
05/01/21
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.25
|
%
|
|
|
|
|
|
$
|
1,223
|
|
|
$
|
1,223
|
|
|
$
|
1,225
|
|
|
|
|
Ela Papou LLC ##
|
|
|
Term Loan
|
|
|
|
06/27/14
|
|
|
|
12/15/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.00
|
%
|
|
|
|
|
|
$
|
1,213
|
|
|
$
|
1,213
|
|
|
$
|
1,213
|
|
|
|
|
Earie Hacking LLC ##
|
|
|
Term Loan
|
|
|
|
12/28/15
|
|
|
|
12/28/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.60
|
%
|
|
|
|
|
|
$
|
1,173
|
|
|
$
|
1,173
|
|
|
$
|
1,174
|
|
|
|
|
Amme Taxi Inc ##
|
|
|
Term Loan
|
|
|
|
10/21/13
|
|
|
|
10/21/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
3.70
|
%
|
|
|
|
|
|
$
|
1,162
|
|
|
$
|
1,162
|
|
|
$
|
1,162
|
|
|
|
|
Yosi Transit Inc ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
12/20/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.81
|
%
|
|
|
|
|
|
$
|
1,018
|
|
|
$
|
1,018
|
|
|
$
|
1,018
|
|
|
|
|
Yosi Transit Inc ##
|
|
|
Term Loan
|
|
|
|
07/20/07
|
|
|
|
12/20/17
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.81
|
%
|
|
|
|
|
|
$
|
140
|
|
|
$
|
140
|
|
|
$
|
140
|
|
|
Various New York && ##
|
|
0.00% to 18.38% (interest rate includes deferred interest 1.00% to 9.19%)
|
|
|
Term Loan
|
|
|
|
03/23/01
to
12/22/17
|
|
|
|
05/28/16
to
12/21/26
|
|
|
|
327
|
|
|
|
42
|
%
|
|
|
4.36
|
%
|
|
$
|
9,623
|
|
|
$
|
139,356
|
|
|
$
|
137,872
|
|
|
$
|
121,948
|
|
|
|
|
(deferred interest of $1,281 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107
|
|
|
|
5
|
%
|
|
|
4.74
|
%
|
|
$
|
0
|
|
|
$
|
20,172
|
|
|
$
|
19,436
|
|
|
$
|
15,602
|
|
|
|
|
Sweetgrass Peach &Chadwick Cap ## (interest rate includes deferred interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
08/28/12
|
|
|
|
02/24/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
6.00
|
%
|
|
|
|
|
|
$
|
1,374
|
|
|
$
|
1,374
|
|
|
$
|
1,374
|
|
|
|
|
(deferred interest of $20 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Various Chicago && ##
|
|
0.00% to 7.00% (interest rate includes deferred interest .75% to 2.75%)
|
|
|
Term Loan
|
|
|
|
01/22/10
to
08/08/16
|
|
|
|
03/12/16
to
12/22/20
|
|
|
|
106
|
|
|
|
5
|
%
|
|
|
4.65
|
%
|
|
$
|
0
|
|
|
$
|
18,798
|
|
|
$
|
18,062
|
|
|
$
|
14,228
|
|
|
|
|
(deferred interest of $207 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newark && ##
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
|
|
|
|
8
|
%
|
|
|
5.34
|
%
|
|
$
|
1,047
|
|
|
$
|
21,999
|
|
|
$
|
21,935
|
|
|
$
|
21,684
|
|
|
|
|
Viergella Inc ##
|
|
|
Term Loan
|
|
|
|
02/20/14
|
|
|
|
02/20/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.75
|
%
|
|
|
|
|
|
$
|
1,278
|
|
|
$
|
1,278
|
|
|
$
|
1,278
|
|
|
Various Newark && ##
|
|
4.50% to 7.00% (interest rate includes deferred interest 1.50%)
|
|
|
Term Loan
|
|
|
|
04/09/10
to
10/12/17
|
|
|
|
10/17/17
to
05/14/25
|
|
|
|
109
|
|
|
|
7
|
%
|
|
|
5.38
|
%
|
|
$
|
1,047
|
|
|
$
|
20,721
|
|
|
$
|
20,657
|
|
|
$
|
20,406
|
|
|
|
|
(deferred interest of $2 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boston && ##
|
|
2.75% to 6.15%
|
|
|
Term Loan
|
|
|
|
06/12/07
to
10/04/17
|
|
|
|
12/07/15
to
11/06/25
|
|
|
|
59
|
|
|
|
6
|
%
|
|
|
4.51
|
%
|
|
$
|
633
|
|
|
$
|
18,907
|
|
|
$
|
18,564
|
|
|
$
|
18,504
|
|
|
Cambridge && ##
|
|
3.75% to 5.50%
|
|
|
Term Loan
|
|
|
|
05/06/11
to
12/15/15
|
|
|
|
03/29/16
to
01/26/20
|
|
|
|
13
|
|
|
|
0
|
%
|
|
|
4.55
|
%
|
|
$
|
0
|
|
|
$
|
824
|
|
|
$
|
773
|
|
|
$
|
693
|
|
|
Various Other && ##
|
|
4.75% to 9.00%
|
|
|
Term Loan
|
|
|
|
04/28/08
to
07/30/15
|
|
|
|
01/03/17
to
09/01/23
|
|
|
|
9
|
|
|
|
0
|
%
|
|
|
7.95
|
%
|
|
$
|
0
|
|
|
$
|
500
|
|
|
$
|
482
|
|
|
$
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total medallion loans ($183,529 pledged as collateral under borrowing
arrangements)
|
|
|
|
|
|
|
|
|
|
|
|
648
|
|
|
|
73
|
%
|
|
|
4.41
|
%
|
|
$
|
12,578
|
|
|
$
|
231,112
|
|
|
$
|
228,416
|
|
|
$
|
208,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured mezzanine
(22% North Carolina, 16% Minnesota, 7% Ohio, 6% Texas, 6%
Delaware 6% California, 5% Oklahoma, 5% Oregon, 4% Kansas, 4% North Dakota, 4% Pennsylvania, and 15% all other states)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing (37% of the total)
|
|
Innovative Metal, Inc. dba Southwest Data Products (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
04/06/17
|
|
|
|
04/06/24
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
14.00
|
%
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
$
|
4,980
|
|
|
|
|
Stride Tool Holdings, LLC (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
04/05/16
|
|
|
|
04/05/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
4,217
|
|
|
$
|
4,217
|
|
|
$
|
4,179
|
|
|
|
|
(capitalized interest of $217 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 44 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2017
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
|
|
|
|
AA Plush Holdings, LLC (interest rate includes PIK interest of 6.00%)
|
|
|
Term Loan
|
|
|
|
08/15/14
|
|
|
|
08/15/19
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
3,397
|
|
|
$
|
3,397
|
|
|
$
|
3,393
|
|
|
|
|
|
|
(capitalized interest of $397 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pinnacle Products International, Inc. (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
10/09/15
|
|
|
|
10/09/20
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
3,249
|
|
|
$
|
3,249
|
|
|
$
|
3,249
|
|
|
|
|
|
|
(capitalized interest of $449 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Paper Products Acquisition, LLC (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
06/09/16
|
|
|
|
06/09/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
3,096
|
|
|
$
|
3,096
|
|
|
$
|
3,096
|
|
|
|
|
|
|
(capitalized interest of $101 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMI Porta Opco, LLC (interest rate includes PIK interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
12/11/17
|
|
|
|
03/11/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
$
|
3,000
|
|
|
$
|
3,002
|
|
|
$
|
3,002
|
|
|
$
|
3,002
|
|
|
|
|
|
|
(capitalized interest of $2 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BB Opco, LLC d/b/a BreathableBaby, LLC (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
08/01/14
|
|
|
|
08/01/19
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
2,718
|
|
|
$
|
2,718
|
|
|
$
|
2,718
|
|
|
|
|
|
|
(capitalized interest of $218 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EGC Operating Company, LLC (interest rate includes PIK interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
09/30/14
|
|
|
|
09/30/19
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
1,959
|
|
|
$
|
1,959
|
|
|
$
|
1,959
|
|
|
|
|
|
|
(capitalized interest of $49 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Cylinder, Inc. d/b/a All Safe (interest rate includes PIK interest of 7.00%)
|
|
|
Term Loan
|
|
|
|
07/03/13
|
|
|
|
09/30/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
19.00
|
%
|
|
|
|
|
|
$
|
1,782
|
|
|
$
|
1,782
|
|
|
$
|
1,782
|
|
|
|
|
|
|
(capitalized interest of $282 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tri-Tech
Forensics, Inc. (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
06/15/17
|
|
|
|
06/15/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
$
|
1,500
|
|
|
$
|
1,500
|
|
|
$
|
1,500
|
|
|
$
|
1,500
|
|
|
|
|
|
|
Orchard Holdings, Inc. &
|
|
|
Term Loan
|
|
|
|
03/10/99
|
|
|
|
03/31/10
|
|
|
|
1
|
|
|
|
*
|
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
1,390
|
|
|
$
|
1,390
|
|
|
$
|
1,390
|
|
|
|
|
|
|
Filter Holdings, Inc. (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
05/05/17
|
|
|
|
05/05/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
14.00
|
%
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
|
|
|
|
Various Other 10.00%
|
|
|
Term Loan
|
|
|
|
03/28/17
|
|
|
|
03/28/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
10.00
|
%
|
|
$
|
200
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Arts, Entertainment, and Recreation (19% of the total)
|
|
|
|
RPAC Racing LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
11/27/17
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
3
|
%
|
|
|
2.00
|
%
|
|
$
|
7,827
|
|
|
$
|
7,827
|
|
|
$
|
7,827
|
|
|
$
|
7,827
|
|
|
|
|
|
|
(capitalized interest of $15 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
06/22/16
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
2,034
|
|
|
$
|
2,034
|
|
|
$
|
2,034
|
|
|
|
|
|
|
(capitalized interest of $278 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
09/14/16
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
|
|
|
|
(capitalized interest of $120 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPAC Racing LLC & (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
11/19/10
|
|
|
|
03/30/20
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
2.00
|
%
|
|
|
|
|
|
$
|
5,611
|
|
|
$
|
5,611
|
|
|
$
|
5,611
|
|
|
|
|
|
|
(capitalized interest of $2,572 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional, Scientific, and Technical Services (18% of the total)
|
|
|
|
Weather Decision Technologies, Inc. (interest rate includes PIK interest of 9.00%)
|
|
|
Term Loan
|
|
|
|
12/11/15
|
|
|
|
12/11/20
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
18.00
|
%
|
|
|
|
|
|
$
|
4,221
|
|
|
$
|
4,221
|
|
|
$
|
4,214
|
|
|
|
|
|
|
(capitalized interest of $721 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather Decision Technologies, Inc. (interest rate includes PIK interest of 7.00%)
|
|
|
Term Loan
|
|
|
|
11/08/17
|
|
|
|
06/30/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
14.00
|
%
|
|
$
|
325
|
|
|
$
|
327
|
|
|
$
|
327
|
|
|
$
|
327
|
|
|
|
|
|
|
(capitalized interest of $2 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADSCO Opco, LLC (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
10/25/16
|
|
|
|
10/25/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
3,687
|
|
|
$
|
3,687
|
|
|
$
|
3,677
|
|
|
|
|
|
|
(capitalized interest of $87 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northern Technologies, LLC (interest rate includes PIK interest of 1.00%)
|
|
|
Term Loan
|
|
|
|
01/29/16
|
|
|
|
01/29/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
13.00
|
%
|
|
|
|
|
|
$
|
3,670
|
|
|
$
|
3,670
|
|
|
$
|
3,670
|
|
|
|
|
|
|
(capitalized interest of $70 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+
|
|
DPIS Engineering, LLC
|
|
|
Term Loan
|
|
|
|
12/01/14
|
|
|
|
06/30/20
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
12.00
|
%
|
|
|
|
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
|
$
|
1,998
|
|
|
|
|
+
|
|
Portu-Sunberg Marketing LLC
|
|
|
Term Loan
|
|
|
|
10/21/16
|
|
|
|
02/21/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
12.00
|
%
|
|
|
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
1,245
|
|
|
|
|
|
|
Various Other 14.00%
|
|
|
Term Loan
|
|
|
|
05/21/15
|
|
|
|
05/21/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
1,156
|
|
|
$
|
1,156
|
|
|
$
|
1,156
|
|
|
|
|
|
|
(capitalized interest of $11 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information (9% of the total)
|
|
|
|
US Internet Corp.
|
|
|
Term Loan
|
|
|
|
03/14/17
|
|
|
|
03/14/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.50
|
%
|
|
$
|
5,650
|
|
|
$
|
4,075
|
|
|
$
|
4,075
|
|
|
$
|
4,062
|
|
|
|
|
|
|
US Internet Corp. (interest rate includes PIK interest of 17.00%)
|
|
|
Term Loan
|
|
|
|
03/14/17
|
|
|
|
03/14/22
|
|
|
|
1
|
|
|
|
*
|
|
|
|
19.00
|
%
|
|
$
|
1,000
|
|
|
$
|
1,147
|
|
|
$
|
1,147
|
|
|
$
|
1,147
|
|
|
|
|
|
|
(capitalized interest of $147 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Centare Holdings, Inc. (interest rate includes PIK interest of 2.00%)
|
|
|
Term Loan
|
|
|
|
08/30/13
|
|
|
|
08/30/18
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
14.00
|
%
|
|
|
|
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
|
$
|
2,497
|
|
|
Wholesale Trade (6% of the total)
|
|
+
|
|
Classic Brands, LLC
|
|
|
Term Loan
|
|
|
|
01/08/16
|
|
|
|
04/30/23
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
12.00
|
%
|
|
|
|
|
|
$
|
2,880
|
|
|
$
|
2,880
|
|
|
$
|
2,880
|
|
Page 45 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2017
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
|
|
|
|
Harrell’s Car Wash Systems, Inc. (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
07/03/17
|
|
|
|
09/03/22
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
$
|
2,000
|
|
|
$
|
2,532
|
|
|
$
|
2,532
|
|
|
$
|
2,529
|
|
|
|
|
|
|
(capitalized interest of $32 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining, Quarrying, and Oil and Gas Extraction (5% of the total)
|
|
|
|
Green Diamond Performance Materials, Inc. (interest rate includes PIK interest of 4.50%)
|
|
|
Term Loan
|
|
|
|
09/08/17
|
|
|
|
09/08/24
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
16.50
|
%
|
|
$
|
4,000
|
|
|
$
|
4,057
|
|
|
$
|
4,057
|
|
|
$
|
4,057
|
|
|
|
|
|
|
(capitalized interest of $57 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation and Warehousing (4% of the total)
|
|
|
|
LLL Transport, Inc. (interest rate includes PIK interest of 3.00%)
|
|
|
Term Loan
|
|
|
|
10/23/15
|
|
|
|
04/23/21
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
15.00
|
%
|
|
|
|
|
|
$
|
3,914
|
|
|
$
|
3,914
|
|
|
$
|
3,912
|
|
|
|
|
|
|
(capitalized interest of $410 per footnote 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction (2% of the total)
|
|
|
|
Highland
Crossing-M,
LLC (interest rate includes PIK interest of 11.50%)
|
|
|
Term Loan
|
|
|
|
01/07/15
|
|
|
|
02/01/25
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
11.50
|
%
|
|
|
|
|
|
$
|
1,445
|
|
|
$
|
1,445
|
|
|
$
|
1,444
|
|
|
Accommodation and Food Services (0% of the total)
|
|
|
|
Various Other 9.25%
|
|
|
Term Loan
|
|
|
|
11/05/10
|
|
|
|
11/05/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
9.25
|
%
|
|
|
|
|
|
$
|
241
|
|
|
$
|
241
|
|
|
$
|
241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total secured mezzanine
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
31
|
%
|
|
|
12.09
|
%
|
|
$
|
31,752
|
|
|
$
|
88,334
|
|
|
$
|
88,334
|
|
|
$
|
88,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other secured commercial
(51% New York, 42% New Jersey and 7% all other
states)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Trade (81% of the total)
|
|
|
|
Medallion Fine Art Inc (interest rate includes PIK interest of 12%)
|
|
|
Term Loan
|
|
|
|
12/17/12
|
|
|
|
03/17/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
12.00
|
%
|
|
|
|
|
|
$
|
999
|
|
|
$
|
999
|
|
|
$
|
999
|
|
|
|
|
|
|
Various Other && 4.75% to 10.50%
|
|
|
Term Loan
|
|
|
|
10/28/08
to
12/23/15
|
|
|
|
05/09/18
to
03/03/20
|
|
|
|
5
|
|
|
|
*
|
|
|
|
7.74
|
%
|
|
|
|
|
|
$
|
835
|
|
|
$
|
795
|
|
|
$
|
604
|
|
|
Accommodation and Food Services (12% of the total)
|
|
|
|
Various Other && 6.75% to 9.00%
|
|
|
Term Loan
|
|
|
|
11/29/05
to
06/06/14
|
|
|
|
04/18/17
to
09/06/19
|
|
|
|
3
|
|
|
|
*
|
|
|
|
8.26
|
%
|
|
|
|
|
|
$
|
644
|
|
|
$
|
544
|
|
|
$
|
228
|
|
|
Transportation and Warehousing (4% of the total)
|
|
|
|
Various Other && 4.25%
|
|
|
Term Loan
|
|
|
|
03/17/15
|
|
|
|
09/10/18
|
|
|
|
1
|
|
|
|
*
|
|
|
|
4.25
|
%
|
|
|
|
|
|
$
|
75
|
|
|
$
|
74
|
|
|
$
|
75
|
|
|
Real Estate and Rental and Leasing (3% of the total)
|
|
|
|
Various Other && 5.00%
|
|
|
Term Loan
|
|
|
|
03/31/15
|
|
|
|
03/31/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
5.00
|
%
|
|
|
|
|
|
$
|
69
|
|
|
$
|
65
|
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Commercial Loans
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
1
|
%
|
|
|
9.39
|
%
|
|
|
|
|
|
$
|
2,622
|
|
|
$
|
2,477
|
|
|
$
|
1,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial loans
(2)
|
|
|
|
44
|
|
|
|
31
|
%
|
|
|
12.02
|
%
|
|
$
|
31,752
|
|
|
$
|
90,956
|
|
|
$
|
90,811
|
|
|
$
|
90,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Medallion Bank and other controlled subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking
|
|
|
|
Medallion Bank **
|
|
|
100% of common stock
|
|
|
|
05/16/02
|
|
|
|
None
|
|
|
|
1
|
|
|
|
101
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
138,282
|
|
|
$
|
290,548
|
|
|
NASCAR Race Team
|
|
|
|
Medallion MotorSports, LLC
|
|
|
75% of LLC units
|
|
|
|
11/24/10
|
|
|
|
None
|
|
|
|
1
|
|
|
|
2
|
%
|
|
|
42.40
|
%
|
|
|
|
|
|
|
|
|
|
$
|
2,820
|
|
|
$
|
4,623
|
|
|
Art Dealer
|
|
|
|
Medallion Fine Art, Inc.
|
|
|
100% of common stock
|
|
|
|
12/03/12
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
1,777
|
|
|
$
|
3,878
|
|
|
Loan Servicing
|
|
|
|
Medallion Servicing Corp.
|
|
|
100% of common stock
|
|
|
|
11/05/10
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
97
|
|
|
$
|
97
|
|
|
Professional Sports Team
|
|
|
|
LAX Group LLC
|
|
|
44.97% of membership interests
|
|
|
|
05/23/12
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
251
|
|
|
$
|
3,001
|
|
|
Media
|
|
|
|
Medallion Taxi Media, Inc.
|
|
|
100% of common stock
|
|
|
|
01/01/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Medallion Bank and other controlled subsidiaries, net
|
|
|
|
6
|
|
|
|
105
|
%
|
|
|
0.83
|
%
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
143,227
|
|
|
$
|
302,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Finance
|
|
|
|
Convergent Capital, Ltd **
|
|
|
7% of limited
partnership interest
|
|
|
|
07/20/07
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
733
|
|
|
$
|
456
|
|
|
NASCAR Race Team
|
|
|
|
Rpac Racing LLC
|
|
|
1,000 shares of
Series D
|
|
|
|
08/25/15
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
2,193
|
|
|
Loan Servicing
|
|
|
|
Upgrade, Inc.
|
|
|
666,668 shares of Series A-1 preferred stock
|
|
|
|
09/30/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
1
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
250
|
|
|
$
|
1,455
|
|
|
Stuffed Toy Manufacturer
|
|
|
|
AA Plush Holdings, LLC d/b/a Animal Adventures
|
|
|
1.6% Common Units
|
|
|
|
08/15/14
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
300
|
|
|
$
|
300
|
|
|
Advertising Services
|
|
|
|
ADSCO Opco, LLC
|
|
|
7.9% Class A Series A-2 Units
|
|
|
|
10/25/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
400
|
|
|
$
|
400
|
|
Page 46 of 89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
Obligor
Name/Interest Rate
Range
|
|
Security
Type (all
restricted
unless
otherwise
noted)
|
|
Acquisition
Date
|
|
|
Maturity
Date
|
|
|
No. of
Invest.
|
|
|
% of
Net
Assets
|
|
|
Interest
Rate
(1)
|
|
|
Original
Cost of 2017
Acquisitions
(5)
|
|
|
Principal
Outstanding
|
|
|
Cost
(4)
|
|
|
Fair
Value
|
|
|
Baby Sleep Products
|
|
|
|
BB Opco, LLC d/b/a BreathableBaby, LLC
|
|
3.6% Units
|
|
|
08/01/14
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
250
|
|
|
$
|
250
|
|
|
IT Services
|
|
|
|
Centare Holdings, Inc.
|
|
7.23% of common stock, 3.88% of preferred stock
|
|
|
08/30/13
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
103
|
|
|
$
|
103
|
|
|
Wholesale Hobbyists’ Supplies
|
|
|
|
Classic Brands, LLC
|
|
Warrant for 300,000 Class A units
|
|
|
01/08/16
|
|
|
|
01/08/26
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Engineering Design Services
|
|
|
|
DPIS Engineering LLC
|
|
Warrant for 180,000 Class C units
|
|
|
12/01/14
|
|
|
|
5th
anniversary
of note paid
in full
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Elevator Parts Manufacturer
|
|
|
|
EMI Porta HoldCo, LLC
|
|
3.56% of Series
A-2
Preferred Units
|
|
|
12/11/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
500
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Industrial Filters Manufacturer
|
|
|
|
Filter Holdings, Inc.
|
|
7.14% of Common Stock, 7.14% of Preferred Stock
|
|
|
05/05/17
|
|
|
|
None
|
|
|
|
2
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
207
|
|
|
|
|
|
|
$
|
207
|
|
|
$
|
207
|
|
|
Specialty Sand Products
|
|
|
|
Green Diamond Performance Materials, Inc.
|
|
4.26% of Series A Preferred Stock
|
|
|
09/08/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
200
|
|
|
|
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Car Wash Equipment Manufacturer
|
|
|
|
Harrell’s Car Wash Systems, Inc.
|
|
0.89% of Common Stock
|
|
|
07/03/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
104
|
|
|
|
|
|
|
$
|
104
|
|
|
$
|
104
|
|
|
Sheet Metal Manufacturer
|
|
|
|
SWDP Acquisition Co., LLC
|
|
9.9875% of LLC Units
|
|
|
04/06/17
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
400
|
|
|
|
|
|
|
$
|
400
|
|
|
$
|
400
|
|
|
Paper Tapes Manufacturer
|
|
|
|
Liberty Paper Products Acquisition, LLC
|
|
100% of Series A Preferred Units—12% TOTAL
|
|
|
06/09/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
350
|
|
|
$
|
350
|
|
|
Environmental Consulting Services
|
|
|
|
Northern Technologies, LLC
|
|
8.27% of LLC units
|
|
|
01/29/2016,
12/5/16 &
6/12/17
|
|
|
|
None
|
|
|
|
3
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
58
|
|
|
|
|
|
|
$
|
408
|
|
|
$
|
408
|
|
|
Space Heater Manufacturer
|
|
|
|
Pinnacle Products International, Inc.
|
|
0.5% common stock
|
|
|
10/09/15
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
135
|
|
|
$
|
135
|
|
|
Marketing Services
|
|
|
|
Portu-Sunberg Marketing LLC
|
|
0.86% LLC units
|
|
|
10/19/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
50
|
|
|
$
|
50
|
|
|
|
|
|
|
Portu-Sunberg Marketing LLC
|
|
Warrant for 2.85% of the outstanding stock
|
|
|
12/31/12
|
|
|
|
07/24/20
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Hand Tool Manufacturer
|
|
|
|
Stride Tool Holdings, LLC
|
|
7.14% of LLC units
|
|
|
04/05/16
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Forensic Supplies
|
|
|
|
Tri-Tech
Forensics, Inc.
|
|
4.91% of Common Stock; 4.61% of Preferred Stock
|
|
|
06/15/17
|
|
|
|
None
|
|
|
|
3
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
$
|
192
|
|
|
|
|
|
|
$
|
192
|
|
|
$
|
192
|
|
|
Weather Forecasting Services
|
|
|
|
Weather Decision Technologies, Inc.
|
|
2.2% preferred stock
|
|
|
12/11/15
|
|
|
|
None
|
|
|
|
1
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Various Other #
|
|
+
|
|
**
|
|
* Various
|
|
|
08/04/08 to
12/12/14
|
|
|
|
None to
2/5/23
|
|
|
|
5
|
|
|
|
*
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
$
|
818
|
|
|
$
|
818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
3
|
%
|
|
|
0.00
|
%
|
|
$
|
1,661
|
|
|
$
|
0
|
|
|
$
|
6,400
|
|
|
$
|
9,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
%
|
|
|
0.00
|
%
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investments ($183,529 pledged as collateral under borrowing arrangements)
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
730
|
|
|
|
212
|
%
|
|
|
4.73
|
%
|
|
$
|
45,991
|
|
|
$
|
322,068
|
|
|
$
|
468,854
|
|
|
$
|
610,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the actual or weighted average interest or dividend rate of the respective security or portfolio as of the date indicated. Investments without an interest rate or with a rate of 0.00% are considered
non-income
producing.
|
|
(2)
|
Included in secured mezzanine commercial loans and other commercial loans was $6,237 of interest income capitalized into the outstanding investment balances, and $1,579 of deferred interest income, in accordance with
the terms of the investment contract.
|
|
(3)
|
The ratio of restricted securities fair value to net assets is 212%.
|
|
(4)
|
Gross unrealized appreciation, gross unrealized depreciation and net appreciation for federal income tax purposes totaled $220,597, $21,306 and $199,291, respectively. The tax cost of investments was $410,844.
|
|
(5)
|
For revolving lines of credit the amount shown is the cost at December 31, 2017.
|
|
**
|
Not an eligible portfolio company as such term is defined in Section 2(a)(46) of the 1940 Act. The percentage value of all
non-eligible
portfolio companies to totaled assets
of Medallion Financial on an unconsolidated basis was up to 59% and up to 48% on a consolidated basis. Under the 1940 Act, we may not acquire any
non-qualifying
assets, unless at the time such acquisition is
made, qualifying assets, which include securities of eligible portfolio companies, represent at least 70% of our total assets. The status of these assets under the 1940 Act are subject to change. We monitor the status of these assets on an ongoing
basis.
|
|
&
|
Loan is on nonaccrual status, or past due on contractual payments, and is therefore considered
non-income
producing.
|
|
&&
|
Some or all of the securities are
non-income
producing as per & above.
|
|
#
|
Publicly traded but sales subject to applicable Rule 144 limitations.
|
|
##
|
Pledged as collateral under borrowing arrangements.
|
|
+
|
Includes various warrants, all of which have a cost and fair value of zero at December 31, 2017.
|
Page 47 of 89
The Summary Schedule of Investments does not reflect the Company’s complete portfolio holdings. It includes
the Company’s 50 largest holdings and each investment of any issuer that exceeds 1% of the Company’s net assets. “Various Other” represents all issues not required to be disclosed under the rules adopted by the U.S. Securities
and Exchange Commission (“SEC”). Footnotes above may apply to securities that are included in “Various Other”. For further detail, the complete schedule of portfolio holdings is available (i) without charge, upon request, by
calling (877) MEDALLION; and (ii) on the SEC’s website at http://www.sec.gov. Filed as Exhibit 99.1 to the Annual Report on Form
10-K
for the fiscal year ended December 31, 2017, filed
on March 14, 2018 (File
No. 814-00188)
Page 48 of 89
Medallion Financial Corp
CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFIILIATES
As of and for the year ended December 31, 2017
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Name of issuer and title of issue
(Dollars
in
thousands)
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Number of shares (all restricted unless
otherwise noted)
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Equity in
net profit
and (loss)
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Amount of
dividends
or interest
(1)
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Value as of
12/31/17
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Medallion Bank – common stock
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1,000,000 shares - 100% of common stock
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$
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10,193
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$
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0
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$
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290,548
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Medallion Motorsports, LLC – membership interest
(2)
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75% of membership interest
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(2,357
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)
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1,201
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4,623
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Medallion Fine Art, Inc. – common
stock
(3)
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1,000 shares - 100% of common stock
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231
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0
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3,878
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LAX Group LLC – membership interest
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45% of membership interest
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870
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0
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3,001
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Medallion Servicing Corp. – common stock
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1,000 shares - 100% of common stock
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546
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0
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97
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Medallion Taxi Media, Inc. – common stock
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1,000 shares - 100% of common stock
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0
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77
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0
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Total investments in Medallion Bank and other controlled
subsidiaries
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9,483
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1,278
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302,147
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RPAC Racing LLC
(2)
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100% of Series D units
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0
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0
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2,193
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Stride Tool Holdings LLC
(4)
–
membership interest
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7.14% of membership interest
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0
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0
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500
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Northern Technologies LLC – membership interest
(5)
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8.3% of membership interest
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0
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0
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408
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ADSCO Holdco LLC – membership
interest
(6)
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7.7% of Class A Series
A-2
LLC units
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0
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0
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400
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SWDP Acquisition Co LLC.
(7)
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10% of membership interest
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0
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0
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400
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Appliance Recycling Centers of America Inc. – common stock
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0% of common stock
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0
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0
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0
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Filter Holdings INC.
(8)
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7.14% of common & preferred stock
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0
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0
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207
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Third Century JRT, Inc.
(9)
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13% of common stock
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0
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0
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200
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Total equity investments in affiliates
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$
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0
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$
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0
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$
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4,308
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(1)
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Investments with an amount of $0 are considered
non-income
producing.
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(2)
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The Company and a controlled subsidiary of the Company have 4 loans due from RPAC Racing LLC, an affiliate of Medallion Motorsports, LLC in the amount of $16,472 as of December 31, 2017, and on which $56 of
interest income was earned during the year ended December 31, 2017 as the loans are on
non-accrual
status.
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Page 49 of 89
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(3)
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The Company has a loan due from Medallion Fine Art, Inc. in the amount of $999 as of December 31, 2017, and on which $165 of interest income was earned during the year ended December 31, 2017.
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(4)
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The Company has a loan due from Stride Tool Holding LLC in the amount of $4,217 as of December 31, 2017, and on which $631 of interest income was earned during the year ended December 31, 2017.
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(5)
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The Company has a loan due from Northern Technologies LLC in the amount of $3,670 as of December 31, 2017, on which $477 of interest income was earned during the year ended December 31, 2017.
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(6)
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The Company has a loan due from ADSCO Holdco LLC in the amount of $ 3,687 as of December 31, 2017, and on which $475 of interest income was earned during the year ended December 31, 2017.
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(7)
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The Company has a loan due from Innovative Metal Inc., an affiliate of SWDP Acquisition Co LLC in the amount of $5,000 as of December 31, 2017, on which $523 of interest income was earned during the year ended
December 31, 2017.
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(8)
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The Company has a loan due from Filter Holdings Inc in the amount of $1,250 as of December 31, 2017, on which $117 of interest income was earned during the year ended December 31, 2017.
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(9)
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The Company has a loan due from JR Thompson Company LLC, an affiliate of Third Century JRT, Inc., in the amount of $1,156 as of December 31, 2017, on which $204 of interest income was earned during the year ended
December 31, 2017.
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Page 50 of 89
The table below provides a recap of the changes in the investment in the respective issuers for the year ended
December 31, 2017.
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Name of Issuer
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Medallion
Bank
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Medallion
Fine Art,
Inc.
(1)
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Medallion
Motorsports,
LLC
(2)
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Appliance
Recycling
Centers
of
America,
Inc.
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Medallion
Servicing
Corp.
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LAX
Group, LLC
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Medallion
Taxi Media,
Inc.
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Third
Century
JRT,
Inc.
(3)
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Northern
Technologies,
LLC
(4)
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Stride Tool
Holding
LLC
(5)
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ADSCO Holdco
LLC
(6)
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RPAC Racing
LLC
(2)
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Filter
Holdings
Inc.
(7)
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SWDP
ACQUISITION
Co LLC
(8)
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Title of Issue
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Common
Stock
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Common
Stock
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Membership
Interest
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Common
Stock
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Common
Stock
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Membership
Interest
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Common
Stock
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Common
Stock
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Membership
Interest
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Membership
Interest
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Membership
Interest
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Membership
Interest
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Common &
Preferred
Stock
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Membership
Interest
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(Dollars in thousands)
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Value as of
12/31/16
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$
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280,589
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$
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3,647
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$
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6,980
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$
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475
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$
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454
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$
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1,690
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$
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—
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$
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200
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$
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351
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$
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500
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$
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400
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$
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1,351
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$
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—
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$
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—
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Gross additions / investments
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—
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—
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—
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—
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—
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441
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—
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—
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57
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—
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—
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—
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207
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400
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Gross reductions / distributions
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(234
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—
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(1,201
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(351
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(903
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—
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(77
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—
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—
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—
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—
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—
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—
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—
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Net equity in profit and loss, and unrealized appreciation and (depreciation)
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10,193
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231
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(1,156
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(124
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546
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870
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77
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—
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—
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—
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—
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842
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—
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—
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Value as of
12/31/17
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$
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290,548
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$
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3,878
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$
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4,623
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$
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—
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$
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97
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$
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3,001
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$
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—
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$
|
200
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$
|
408
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$
|
500
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$
|
400
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$
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2,193
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$
|
207
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$
|
400
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(1)
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The Company has a loan due from Medallion Fine Art, Inc. in the amount of $999 as of December 31, 2017, $0 of which was advanced during 2017, and for which $2,325 was repaid.
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(2)
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In addition to the equity ownership, the Company and a controlled subsidiary of the Company have four loans due from RPAC Racing LLC, an affiliate of Medallion Motorsports, LLC, in the amount of $16,472, $7,883 of which
was advanced during 2017.
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(3)
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The Company has a loan due from J. R. Thompson Company, LLC, an affiliate of Third Century JRT, Inc in the amount of $1,156 as of December 31, 2017, $469 of which was repaid during 2017.
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(4)
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The Company has a loan due from Northern Technologies LLC in the amount of $3,670 as of December 31, 2017, $137 of which was advanced during 2017.
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(5)
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The Company has a loan due from Stride Tool Holdings LLC in the amount of $4,217 as of December 31, 2017, $126 of which was advanced during 2017.
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(6)
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The Company has a loan due from ADSCO Holdco LLC in the amount of $3,687 as of December 31, 2017, $74 of which was advanced during 2017.
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(7)
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The Company has a loan due from Filter Holdings Inc. in the amount of $1,250 as of December 31, 2017, all of which was advanced during 2017.
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(8)
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The Company has a loan due from Innovative Metals, Inc., an affiliate of SWDP Acquisition Co LLC in the amount of $5,000 as of December 31, 2017, all of which was advanced during 2017.
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Page 51 of 89