Medallion Bank Reports 2020 First Quarter Results and Board of Directors Declares Series F Preferred Stock Dividend

SALT LAKE CITY--()--Medallion Bank (Nasdaq: MBNKP, “the Bank”), an FDIC-insured bank providing consumer loans for the purchase of recreational vehicles, boats and home improvements, along with loan origination services to fintech partners, announced today its 2020 first quarter results. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

2020 First Quarter Highlights

  • Net loss was $0.4 million, compared to net income of $2.4 million in the 2019 first quarter
  • Net interest income was $27.8 million, compared to $23.9 million in the prior year period
  • Provision for loan losses was $15.3 million, compared to $11.2 million in the prior year period, while annualized net charge-offs were 3.42% of average loans outstanding, compared to 5.33% in the prior year period
  • The gross recreation and home improvement loan portfolios both grew 3% from December 31, 2019
  • The gross medallion loan portfolio decreased 3% to $105.1 million compared to $108.4 million at December 31, 2019
  • Total assets were $1.2 billion as of March 31, 2020
  • The Bank had $224 million in capital and a Tier 1 leverage ratio of 18.78% as of March 31, 2020
  • During March, the Bank launched its first fintech strategic partnership, which will leverage the Bank’s compliance, lending operations, and management expertise

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “The Bank had a strong start to the year but the escalating COVID-19 pandemic led us to increase our loan loss reserves in March. In addition, transaction activity during the quarter indicated the need to lower medallion collateral values substantially in New York City, which reduced the Bank’s net income by approximately $7 million. While it is too early to predict how our consumer portfolio will be affected by the current economic disruption, we structured the Bank with resilience in mind and remain optimistic the Bank is well positioned to respond to opportunities to grow market share. The annualized consumer loan delinquency rate is only modestly higher than it was this time last year, our capital position remains strong, and our focus is on credit quality while moving forward cautiously. I am proud of how our employees have adapted and continued serving our customers and borrowers while working remotely. They demonstrate every day why we are a leader in our chosen niches.”

Recreation Lending Segment

The Bank’s gross recreation loan portfolio was $720.2 million as of March 31, 2020, compared to $699.5 million at the end of 2019. Net interest income for the first quarter was $22.8 million, compared to $19.6 million in the prior year period. Recreation loans were 66.2% of the Bank’s loans receivable as of March 31, 2020, compared to 65.9% at the end of 2019.

Home Improvement Lending Segment

The Bank’s gross home improvement loan portfolio was $260.6 million as of March 31, 2020, compared to $252.1 at the end of 2019. Net interest income for the first quarter was $4.6 million, compared to $3.5 million in the prior year period. Home improvement loans were 24.0% of the Bank’s loans receivable as of March 31, 2020, compared to 23.7% at the end of 2019.

Medallion Lending Segment

The Banks’s gross medallion loan portfolio was $105.1 million as of March 31, 2020, compared to $108.4 million at the end of 2019. Medallion loan delinquencies 90 days or more past due were $1.2 million as of March 31, 2020, compared to $0.4 million at the end of 2019. Medallion loan delinquencies 30 days or more past due were $22.4 million as of March 31, 2020, compared to $10.3 million at the end of 2019 Medallion loans were 9.7% of the Bank’s loans receivable as of March 31, 2020, compared to 10.2% at the end of 2019.

On April 29, 2020, the Bank’s Board of Directors declared a quarterly cash dividend of $0.50 per share on the Bank’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, which trades on the Nasdaq Capital Market under the ticker symbol “MBNKP.” The dividend is payable on July 1, 2020 to holders of record at the close of business on June 15, 2020.

About Medallion Bank

Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats and home improvements, and offering loan origination services to fintech partners. The Bank works directly with thousands of dealers, contractors and financial service providers serving their customers throughout the United States. Since its founding in 2003, Medallion Bank has been in the top 2% of banks in the U.S. when measured by Tier 1 leverage ratio and annual return on assets. The Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City with an office in Bothell, Washington.

For more information, visit www.medallionbank.com

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, the potential for future asset growth and market share growth opportunities. Medallion Bank’s actual results may differ significantly from the results discussed in such forward-looking statements. For example, statements about the effects of the COVID-19 pandemic on Medallion Bank’s business, operations, financial performance and prospects constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond Medallion Bank’s control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Medallion Bank, its customers and third parties. In addition, Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period. In addition to risks related to the ongoing COVID-19 pandemic, 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 Medallion Bank’s Form 10-K filed with the FDIC. Medallion Bank’s Form 10-K and other FDIC filings are available in the Investor Relations section of Medallion Bank’s website.

MEDALLION BANK
STATEMENTS OF OPERATIONS
(UNAUDITED)

For the Three Months Ended March 31

(Dollars in thousands)

 

2020

 

 

2019

 

Total interest income

$

33,750

 

$

28,832

 

Total interest expense

 

5,941

 

 

4,922

 

Net interest income

 

27,809

 

 

23,910

 

 
Provision for loan losses

 

15,271

 

 

11,206

 

Net interest income after provision for loan losses

 

12,538

 

 

12,704

 

 
Other (loss) income
Write-downs of loan collateral in process of foreclosure

 

(4,576

)

 

(1,712

)

Other non-interest income

 

17

 

 

11

 

Total non-interest (loss) income, net

 

(4,559

)

 

(1,701

)

 
Non-interest expense
Loan servicing

 

2,755

 

 

2,534

 

Salaries and benefits

 

2,524

 

 

2,101

 

Collection costs

 

963

 

 

1,158

 

Professional fees

 

769

 

 

1,297

 

Regulatory fees

 

365

 

 

464

 

Occupancy and equipment

 

215

 

 

130

 

Other

 

975

 

 

900

 

Total non-interest expense

 

8,565

 

 

8,583

 

 
(Loss) income before income taxes

 

(586

)

 

2,420

 

(Benefit) provision for income taxes

 

(150

)

 

27

 

 
Net (loss) income

$

(436

)

$

2,393

 

 
 
MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands) March 31, 2020 December 31, 2019
Assets
Cash and federal funds sold

$

39,808

 

$

50,237

 

Investment securities, available-for-sale

 

46,127

 

 

48,998

 

Loans, inclusive of net deferred loan acquisition costs

 

1,105,918

 

 

1,079,553

 

Allowance for loan losses

 

(66,036

)

 

(59,885

)

Loans, net

 

1,039,882

 

 

1,019,668

 

Loan collateral in process of foreclosure

 

25,579

 

 

30,639

 

Fixed assets and right-of-use assets, net

 

3,764

 

 

3,852

 

Deferred tax assets

 

12,912

 

 

11,419

 

Accrued interest receivable and other assets

 

31,221

 

 

28,417

 

Total assets

$

1,199,293

 

$

1,193,230

 

 
Liabilities and Shareholders' Equity
Deposits and other funds borrowed

$

960,376

 

$

951,651

 

Accrued interest payable

 

2,103

 

 

2,096

 

Income taxes payable

 

2,341

 

 

2,144

 

Other liabilities

 

9,857

 

 

9,157

 

Due to affiliates

 

924

 

 

1,041

 

Total liabilities

 

975,601

 

 

966,089

 

 
Total shareholders' equity

 

223,692

 

 

227,141

 

Total liabilities and shareholders' equity

$

1,199,293

 

$

1,193,230

 

 
 

 

Contacts

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

Contacts

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