Medallion Bank Reports 2019 Fourth Quarter and Full Year Results

SALT LAKE CITY--()--Medallion Bank (Nasdaq: MBNKP, “the Bank” or the “Company”), an FDIC-insured bank specializing in recreation and home improvement lending announced today its 2019 fourth quarter and full year results. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

2019 Fourth Quarter Highlights

  • Net income was $9.2 million, compared to $2.4 million in the prior year period
  • Net interest income was $27.7 million, compared to $24.4 million in the prior year period
  • Provision for loan losses was $6.3 million, compared to $11.2 million in the prior year period
  • Net charge-offs were 3.19% of average loans outstanding, compared to 6.90% in the 2018 quarter
  • Total assets were $1.20 billion as of December 31, 2019
  • The tier 1 leverage ratio was 19.56% as of December 31, 2019

2019 Full Year Highlights

  • Net income was $23.0 million, up more than 300% from $5.7 million in the prior year period
  • Return on assets was 2.08%, compared to 0.54% in 2018
  • Provision for loan losses was $39.0 million, compared to $50.7 million in the prior year
  • Net charge-offs were 4.30% of average loans outstanding, compared to 5.60% in 2018
  • The recreation loan portfolio grew 20% in 2019
  • The home improvement loan portfolio grew 35% in 2019
  • The medallion loan portfolio decreased from $153.1 million to $107.7 million, or 30%, during 2019
  • Net interest income was $104.2 million, compared to $98.2 million in the prior year, driven by loan growth in the consumer loan portfolios

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “The Bank had a productive fourth quarter as we completed our initial public offering of preferred stock on the Nasdaq Capital Market exchange. We will now report our earnings in conjunction with filing our quarterly Call Report. This was the Bank’s second straight quarter of net income over $9 million and the most profitable six months in company history, which helped to produce a 2.08% return on assets for the year. Our results reflect consistent performance from our recreation and home improvement lending segments, as we continue to liquidate the remaining medallion loan portfolio. With the $46 million preferred stock offering successfully completed in December, and now with more than $229 million of equity, we are positioned for prudent asset growth.”

Recreation Lending Segment

The Bank’s recreation loan portfolio was $722.4 million as of December 31, 2019, compared to $599.7 million at December 31, 2018. Net interest income for the fourth quarter was $22.8 million, compared to $20.1 million in the prior year period. Recreation loans were 66.9% of the Bank’s loans as of December 31, 2019.

Home Improvement Lending Segment

The Bank’s home improvement loan portfolio was $247.6 million as of December 31, 2019, compared to $183.5 million at December 31, 2018. Net interest income for the fourth quarter was $4.5 million, compared to $3.4 million in the prior year period. Home improvement loans were 22.9% of the Bank’s loans receivable as of December 31, 2019.

Medallion Lending Segment

The Banks’s medallion loan portfolio was $107.7 million as of December 31, 2019, compared to $153.1 million at December 31, 2018. Medallion loan delinquencies 90 days or more past due were $0.3 million as of December 31, 2019, compared to $14.2 million at December 31, 2018. Medallion loan delinquencies 30 days or more past due were $10.3 million as of December 31, 2019, compared to $20.5 million at December 31, 2018. The medallion loan portfolio provision for loan losses was $9.7 million in 2019 compared to $30.6 million in 2018. Medallion loans were 9.0% of the Bank’s total assets as of December 31, 2019, compared to 15.0% at December 31, 2018.

About Medallion Bank

Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City, Utah. Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats, and home improvements. Medallion Bank is a wholly owned subsidiary of Medallion Financial Corp., a finance company that originates and services loans in various industries.

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. These statements are often, but not always, made through the use of words or phrases such as “will” and “continue” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These statements relate to future public announcements of our earnings, expectations regarding medallion loan portfolio liquidation and the potential for future asset growth. Medallion Bank’s actual results may differ significantly from the results discussed in such forward-looking statements. In addition, Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period. For a description of certain risks to which Medallion Bank is or may be subject, please refer to the factors discussed under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in the offering circular attached as Exhibit 99.1 to Medallion Bank’s Form 10 filed with the FDIC. The Bank’s Form 10 and other FDIC filings are available in the Investor Relations section of the Bank’s website.

 
MEDALLION BANK
STATEMENTS OF INCOME
(UNAUDITED)
 
For the Three Months Ended December 31 Year Ended December 31
(Dollars in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Total interest income

$

33,846

 

$

29,406

 

$

126,723

 

$

116,073

 

Total interest expense

 

6,112

 

 

4,965

 

 

22,521

 

 

17,844

 

Net interest income

 

27,734

 

 

24,441

 

 

104,202

 

 

98,229

 

 
Provision for loan losses

 

6,349

 

 

11,224

 

 

39,050

 

 

50,673

 

Net interest income after provision for loan losses

 

21,385

 

 

13,217

 

 

65,152

 

 

47,556

 

 
Other income (loss)

Write-downs of loan collateral in process of foreclosure

(134

)

(1,791

)

(2,543

)

(12,590

)

Gain on sale of loans

 

-

 

 

-

 

 

-

 

 

2,914

 

Other non-interest income

 

17

 

 

27

 

 

305

 

 

237

 

Total non-interest income (loss), net

 

(117

)

 

(1,764

)

 

(2,238

)

 

(9,439

)

 
Non-interest expense
Loan servicing

 

2,725

 

 

2,527

 

 

10,610

 

 

10,211

 

Salaries and benefits

 

2,259

 

 

1,941

 

 

8,806

 

 

7,709

 

Collection costs

 

1,636

 

 

1,241

 

 

5,519

 

 

4,282

 

Professional fees

 

770

 

 

362

 

 

2,722

 

 

1,312

 

Regulatory fees

 

526

 

 

574

 

 

1,722

 

 

2,349

 

Occupancy and equipment

 

173

 

 

162

 

 

576

 

 

565

 

Other

 

832

 

 

(74

)

 

3,527

 

 

2,451

 

Total non-interest expense

 

8,921

 

 

6,733

 

 

33,482

 

 

28,879

 

 
Income before income taxes

 

12,347

 

 

4,720

 

 

29,432

 

 

9,238

 

Provision for income taxes

 

3,119

 

 

2,298

 

 

6,457

 

 

3,572

 

 
Net income

$

9,228

 

$

2,422

 

$

22,975

 

$

5,666

 

 
MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)
 
(Dollars in thousands) December 31, 2019 December 31, 2018
Assets
Cash and federal funds sold

$

50,237

 

$

33,995

 

Investment securities, available-for-sale

 

48,998

 

 

45,324

 

Loans, inclusive of net deferred loan acquisition costs

 

1,079,553

 

 

938,222

 

Allowance for loan losses

 

(56,443

)

 

(60,137

)

Loans, net

 

1,023,110

 

 

878,085

 

Loan collateral in process of foreclosure

 

30,639

 

 

28,723

 

Fixed assets and right-of-use assets, net

 

3,852

 

 

513

 

Deferred tax assets

 

10,506

 

 

11,648

 

Accrued interest receivable and other assets

 

28,417

 

 

24,224

 

Total assets

$

1,195,759

 

$

1,022,512

 

 
Liabilities and Shareholders' Equity
Funds borrowed

$

951,651

 

$

848,040

 

Accrued interest payable

 

2,096

 

 

1,730

 

Income taxes payable

 

2,144

 

Other liabilities

 

9,308

 

 

5,476

 

Due to affiliates

 

1,041

 

 

271

 

Total liabilities

 

966,240

 

 

855,517

 

 
Total shareholders' equity

 

229,519

 

 

166,995

 

Total liabilities and shareholder' equity

$

1,195,759

 

$

1,022,512

 

 

 

Contacts

Alex E. Arzeno
Investor Relations
212-328-2168
InvestorRelations@medallion.com

Contacts

Alex E. Arzeno
Investor Relations
212-328-2168
InvestorRelations@medallion.com