Medallion Financial Corp. (Nasdaq: MFIN, “Medallion” or the
“Company”), a finance company that originates and services loans in
various consumer and commercial niche industries, announced today
its 2019 fourth quarter and full year results.
2019 Fourth Quarter Highlights
- Net income was $2.8 million, or $0.11 per share, compared to
$9.2 million, or $0.38 per share, in the prior year period, which
included a gain of $25.3 million as a result of the Company
successfully deconsolidating Trust III in the 2018 fourth
quarter
- Net interest income was $26.6 million, primarily reflective of
the contributions of the consumer lending segments
- Net interest margin was 8.82% in the 2019 fourth quarter, up
from 8.07% in the year ago quarter, reflecting the greater
contribution of the higher yielding consumer and commercial
segments
- Net interest margins for the recreation and home improvement
segments were 12.98% and 7.13%
- Net income from the consumer and commercial segments totaled
$7.2 million in the quarter
- The total interest yield on the Company’s loan portfolio was
12.69% in the 2019 fourth quarter
- Medallion loan exposure continued to be reduced, with the net
portfolio at $109.4 million at quarter end which represented 7% of
total assets
- Total assets were $1.55 billion as of December 31, 2019
2019 Full Year Highlights
- 2019 earnings were $1.5 million compared to a loss of $25.0
million in 2018
- 2019 net income from Medallion’s consumer and commercial
segments was $31.9 million
- Net consumer loans grew 23% year over year
- Consumer originations were $443.5 million for the year, up from
$408.4 million in 2018
- 2019 net interest margin was 8.64%
- Net cash flow from operations was $64.9 million
- Total medallion loans 90 days or more past due were $2.6
million, or 2.0% of total medallion loans at the end of 2019
- Net medallion loans dropped 30% from $155.9 million to $109.4
million at year end
Andrew Murstein, President of Medallion, stated, “2019 was a
significant year for us as we turned the corner and moved forward
with a profitable year, and delivered on the strategy we have laid
out. We continued to reduce the Company’s medallion losses and
portfolio, raised capital, and began the process to provide loan
origination services to the fintech industry. Losses from our
medallion exposure, in particular in the second half of the year,
have been lower than in recent years. We completed both a private
placement at Medallion Financial of investment grade debt, and an
initial public offering of perpetual preferred stock at Medallion
Bank, raising over $82 million in total during 2019. This will
allow us to grow our consumer portfolio. This past July, we hired
an experienced executive at Medallion Bank to build-out its
Strategic Partnership Program with financial technology companies,
which we hope will ultimately provide new opportunities for profits
and growth through the generation of fee income, as well as
providing portfolio diversification. We look forward to providing
updates on our progress in building out this new program throughout
the year, as we hope to have our first partnership established and
operational in the next few months.
"Our consumer and commercial segments had a record breaking year
after coming off a strong 2018, as net income before taxes from our
mezzanine, home improvement and recreation lending divisions
totaled $43 million in 2019. Specifically, we saw the consumer
segments continue to thrive in the 2019 second half, as for the
first time since the inception of Medallion Bank, we recorded back
to back quarters of over $9 million of net income. Looking ahead,
we forecast our consumer segments to experience solid growth in
2020, while maintaining good credit quality for the portfolio.
"At the end of the year, Medallion Capital, the lead driver in
our commercial lending segment, had $40 million in capital, and
Medallion Bank had $230 million in capital.”
Mr. Murstein continued: “The medallion loan portfolio remains at
the lowest level since going public in 1996. We continue to monitor
industry news, both from a legislative and regulatory standpoint,
and remain optimistic that the recommendations and proposals being
reviewed by the City of New York will stabilize the industry, and
help alleviate the pressure put on the borrowers as a result of the
e-hail industry.”
“Lastly, we were pleased to have been recognized in the
broad-market Russell 3000® Index in June 2019. This has allowed us
to strengthen our position within the investment community.”
Larry Hall, Chief Financial Officer, stated, “We recorded a net
interest margin of 8.82% in the 2019 fourth quarter, the highest in
12 years, which resulted in the Company being able to end the year
with a net interest margin of 8.64%. The total interest yield on
the Company’s loan portfolio was 12.69% in the 2019 fourth quarter,
the highest it has been since we withdrew our BDC election and
consolidated Medallion Bank. As a result of the Bank’s public
offering of preferred shares, the Bank ended 2019 with a Tier 1
leverage ratio of 19.56%. The fourth quarter income tax provision
included a charge of $1.5 million or $0.06 per share, attributable
to the change in the Company’s effective state income tax rate and
its impact on the deferred tax liability.”
Consumer Lending Segments
Medallion’s net consumer lending portfolio as of December 31,
2019 was $940.0 million, compared to $761.5 million at the end of
2018. Net interest income for the 2019 fourth quarter was $27.0
million, compared to $23.6 million in the prior year period. The
average interest rate on the portfolio was 14.54% at December 31,
2019, compared to 15.06% at the end of 2018. Consumer loan
delinquencies 90 days or more past due as of December 31, 2019 were
0.64%, compared to 0.57% a year ago.
Commercial Lending Segment
The Company’s net commercial lending portfolio as of December
31, 2019 was $66.4 million, compared to $60.0 million at the end of
the prior year period. The yield on the portfolio was 10.74% in the
2019 fourth quarter, compared to 14.33% in the 2018 fourth quarter.
Net income for the 2019 fourth quarter was $0.366 million.
Medallion Lending Segment
The Company’s net medallion lending portfolio as of December 31,
2019 was $109.4 million, compared to $155.9 million at the end of
2018. The average interest rate on the medallion portfolio was
4.17%, compared to 4.43% a year ago. Total medallion loan
delinquencies 90 days or more past due were $2.6 million, or 2.0%
of the total portfolio, as of December 31, 2019, compared to $16.7
million or 9.4% of the total portfolio at the end of 2018. Total
medallion loan delinquencies 30 days or more past due were $17.2
million as of December 31, 2019, or 13.6% of the total portfolio,
compared to $28.1 million, or 15.9% of the total portfolio, at
December 31, 2018. Medallion loans comprised 10% of the Company’s
net loans receivable as of December 31, 2019, compared to 16% at
the end of 2018.
* * *
Conference Call Information
The Company will be hosting a conference call to discuss the
2019 fourth quarter and full year financial results on Friday,
February 21, 2020 at 9:00 a.m. Eastern time.
The dial-in number for the conference call is (877) 407-0789
(toll-free) or (201) 689-8562 (direct). Please dial the number 10
minutes prior to the scheduled start time. A live webcast of the
conference call will also be available on our website at
http://www.medallion.com/investors.html.
A replay will be available following the end of the call through
Friday, February 28, 2020, by telephone at (844) 512-2921
(toll-free) or (412) 317-6671 (direct), passcode 13699052. A
webcast replay of the call will be available at
http://www.medallion.com/investors.html until the next quarter’s
results are announced.
* * *
About Medallion Financial Corp.
Medallion Financial Corp. is a finance company that originates
and services loans in various industries, and its wholly-owned
subsidiary, Medallion Bank, also originates and services consumer
loans. Medallion Financial Corp. has lent more than $8.8 billion
since its initial public offering in 1996.
Please note that this press release contains forward-looking
statements that involve risks and uncertainties relating to
business performance, cash flow, costs, sales, net investment
income, earnings, and growth. Medallion’s actual results may differ
significantly from the results discussed in such forward-looking
statements. Factors that might cause such a difference include, but
are not limited to, those factors discussed under the heading “Risk
Factors,” in Medallion’s 2018 Annual Report on Form 10-K and its
other filings with the SEC.
MEDALLION FINANCIAL
CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
Bank Holding Company Accounting Combined(1)
For the Three Months Ended December 31 For the Year Ended
December 31 (Dollars in thousands, except shares and per share
data)
2019
2018
2019
2018
Total interest income/total investment income
$
35,864
$
31,007
$
132,562
$
100,836
Total interest expense
9,277
8,004
35,045
28,367
Net interest income/net investment income
26,587
23,003
97,517
72,469
Provision for loan losses
6,162
10,227
43,013
59,008
Net interest income after provision for loan losses
20,425
12,776
54,504
13,461
Other income (loss) Gain on deconsolidation of Trust
III
-
25,325
-
25,325
Sponsorship and race winnings
2,734
3,769
18,742
14,368
Gain on sale of loans
-
(542
)
-
4,946
Writedown of loan collateral in process of foreclosure
(177
)
(827
)
(4,381
)
(2,188
)
Other income
410
(98
)
6,026
(445
)
Total other income
2,967
27,627
20,387
42,006
Other expenses Salaries and employee benefits
6,514
7,719
24,971
21,706
Collection costs
2,049
2,989
6,638
5,207
Race team related expenses
1,785
1,705
8,996
7,121
Professional fees
1,441
2,412
7,402
9,332
Loan servicing fees
1,402
1,157
5,253
3,470
Intangible asset impairment
-
5,615
-
5,615
Other expenses
3,752
4,094
14,921
13,738
Total other expenses
16,943
25,691
68,181
66,189
Income before income taxes/net investment loss before
taxes
6,449
14,712
6,710
(10,722
)
Income tax provision
(3,412
)
(4,847
)
(1,486
)
(373
)
Net income after income taxes/net investment loss after
taxes
3,037
9,865
5,224
(11,095
)
Net realized losses on investments, net of taxes
-
-
-
(26,319
)
Net unrealized appreciation on investments, net of taxes
-
-
-
14,675
Net realized/unrealized losses on investments
-
-
-
(11,644
)
Net income after income taxes/net decrease on net assets
resulting from operations
3,037
9,865
5,224
(22,739
)
Less: income attributable to non-controlling interests
274
693
3,758
2,307
Total net income (loss) attributable to Medallion Financial
Corp.
$
2,763
$
9,172
$
1,466
$
(25,046
)
Basic net income (loss) per share
$
0.11
$
0.38
$
0.06
$
(1.03
)
Diluted net income (loss) per share
0.11
0.38
0.06
(1.03
)
Weighted average common shares outstanding Basic
24,361,680
24,237,841
24,342,979
24,214,978
Diluted
24,541,166
24,404,010
24,557,925
24,214,978
(1) Balance includes the nine months ended December 31, 2018 under
Bank Holding Company Accounting and the three months ended March
31, 2018 under Investment Company Accounting.
MEDALLION FINANCIAL
CORP.
CONSOLIDATED BALANCE
SHEETS
(Dollars in thousands, except shares and per share
data)
December 31, 2019 December 31, 2018
Assets
Cash and federal funds sold
$
67,821
$
57,713
Equity investments and investment securities
59,077
54,521
Loans
1,160,855
1,017,882
Allowance for loan losses
(41,720
)
(36,395
)
Net loans receivable
1,119,135
981,487
Loan collateral in process of foreclosure
52,711
49,495
Goodwill and intangible assets
203,339
204,785
Other assets
43,957
33,845
Total assets
$
1,546,040
$
1,381,846
Liabilities Accounts payable, accrued
expenses, and accrued interest payable
$
20,632
$
22,641
Deposits
951,651
848,040
Short-term borrowings
38,223
55,178
Deferred tax liabilities and other tax payables
10,486
6,973
Operating lease liabilities
12,738
—
Long-term debt
174,614
158,810
Total liabilities
1,208,344
1,091,642
Commitments and contingencies.
Total
stockholders’ equity
266,376
262,608
Non-controlling interests in consolidated
subsidiaries
71,320
27,596
Total equity
337,696
290,204
Total liabilities and equity
$
1,546,040
$
1,381,846
Number of shares outstanding
24,646,559
24,434,357
Book value per share
$
10.81
$
10.75
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200220005834/en/
Company: Alex E. Arzeno
Investor Relations 212-328-2176 InvestorRelations@medallion.com
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