[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis for Medallion Financial Corp. [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements of Medallion Financial Corp. for the three and six months ended June 30, 2025, and December 31, 2024, along with accompanying notes. The statements include the balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows, prepared in accordance with SEC regulations and GAAP, with certain condensed or omitted disclosures - Medallion Financial Corp. is a specialty finance company focused on consumer finance and commercial lending, operating through wholly-owned subsidiaries including Medallion Bank[13](index=13&type=chunk) Consolidated Financial Highlights (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $2,879,994 | $2,868,606 | | Total Liabilities | $2,347,429 | $2,429,648 | | Total Equity | $532,565 | $438,958 | | Common Shares Outstanding | 23,246,593 | 23,135,624 | | Book Value Per Common Share | $16.77 | $16.00 | [Basis of Preparation](index=4&type=section&id=BASIS%20OF%20PREPARATION) The financial statements are unaudited, prepared under SEC rules and GAAP, with management affirming fair presentation - The financial statements are unaudited and prepared in accordance with SEC rules and GAAP, with certain condensed disclosures. Management believes all necessary adjustments for fair presentation are included[13](index=13&type=chunk) - The Company's strategic focus is on growing its consumer finance and commercial lending businesses[13](index=13&type=chunk) Total Assets (in billions) | Metric | June 30, 2025 (in billions) | December 31, 2024 (in billions) | | :---------- | :-------------------------- | :------------------------------ | | Total Assets | $2.88 | $2.87 | [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section details the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Data (in thousands) | Asset/Liability Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $110,361 | $98,238 | | Net loans receivable | $2,305,665 | $2,265,428 | | Total assets | $2,879,994 | $2,868,606 | | Deposits | $2,009,176 | $2,090,071 | | Long-term debt | $199,928 | $232,159 | | Total liabilities | $2,347,429 | $2,429,648 | | Total stockholders' equity | $389,896 | $370,170 | | Non-controlling interest | $142,669 | $68,788 | | Total equity | $532,565 | $438,958 | - Total assets increased slightly to **$2.88 billion** as of June 30, 2025, from **$2.87 billion** at December 31, 2024. Net loans receivable saw an increase, while deposits decreased[16](index=16&type=chunk) - Non-controlling interest in consolidated subsidiaries significantly increased from **$68.8 million** to **$142.7 million**, contributing to the overall increase in total equity[16](index=16&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents the company's revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations Data (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $77,442 | $70,704 | $152,867 | $137,774 | | Total interest expense | $24,072 | $20,836 | $48,085 | $39,989 | | Net interest income | $53,370 | $49,868 | $104,782 | $97,785 | | Provision for credit losses | $21,562 | $18,577 | $43,576 | $35,778 | | Net income attributable to Medallion Financial Corp. | $11,069 | $7,101 | $23,083 | $17,125 | | Basic earnings per share | $0.49 | $0.31 | $1.02 | $0.76 | | Diluted earnings per share | $0.46 | $0.30 | $0.96 | $0.73 | - Net income attributable to Medallion Financial Corp. increased significantly by **55.9%** for the three months ended June 30, 2025, and by **34.8%** for the six months ended June 30, 2025, compared to the prior year periods[21](index=21&type=chunk) - Total interest income grew, driven by increased interest and fees on loans, while total interest expense also rose due to higher interest on deposits and borrowings[21](index=21&type=chunk) [Consolidated Statements of Other Comprehensive Income](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OTHER%20COMPREHENSIVE%20INCOME) This section reports changes in equity from non-owner sources, including net income and other comprehensive income components Consolidated Statements of Other Comprehensive Income Data (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income after taxes | $13,667 | $8,613 | $27,193 | $20,149 | | Other comprehensive (loss) income, net of tax | $(89) | $102 | $549 | $(48) | | Total comprehensive income attributable to Medallion Financial Corp. | $10,980 | $7,203 | $23,632 | $17,077 | - Total comprehensive income attributable to Medallion Financial Corp. increased by **52.4%** for the three months and **38.4%** for the six months ended June 30, 2025, compared to the same periods in 2024[24](index=24&type=chunk) [Consolidated Statement of Changes in Stockholders' Equity](index=8&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY) This section outlines the changes in equity components, including common stock, retained earnings, and non-controlling interest, over the reporting period - Total equity increased from **$438.96 million** at December 31, 2024, to **$532.57 million** at June 30, 2025, primarily driven by net income and a significant increase in non-controlling interest equity raised by Medallion Bank[26](index=26&type=chunk) Equity Components (in thousands) | Equity Component (in thousands) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :------------------------------ | :---------------------- | :----------------------- | | Common Stock | $293 | $295 | | Additional Paid In Capital | $293,412 | $295,834 | | Treasury Stock | $(50,144) | $(51,130) | | Retained Earnings | $130,256 | $147,995 | | Accumulated Other Comprehensive Loss | $(3,647) | $(3,098) | | Total Stockholders' Equity | $370,170 | $389,896 | | Non-controlling Interest | $68,788 | $142,669 | | Total Equity | $438,958 | $532,565 | - Medallion Bank raised **$73.13 million** in non-controlling interest equity during the six months ended June 30, 2025[26](index=26&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section details cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Activities (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $25,536 | $59,900 | | Net cash used for investing activities | $(30,296) | $(204,517) | | Net cash (used in) provided by financing activities | $(12,818) | $152,733 | | Net (decrease) increase in cash and cash equivalents | $(17,578) | $8,116 | | Cash and cash equivalents, end of period | $151,994 | $157,961 | - Net cash provided by operating activities decreased significantly in the first six months of 2025 compared to 2024, primarily due to changes in other assets and accounts payable/accrued expenses[31](index=31&type=chunk) - Financing activities shifted from providing **$152.7 million** in cash in 2024 to using **$12.8 million** in 2025, despite **$73.1 million** in non-controlling interest equity raised by Medallion Bank, due to higher repayments of time deposits and funds borrowed[31](index=31&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures supporting the consolidated financial statements [(1) Organization of Medallion Financial Corp. and Its Subsidiaries](index=11&type=section&id=(1)%20ORGANIZATION%20OF%20MEDALLION%20FINANCIAL%20CORP.%20AND%20ITS%20SUBSIDIARIES) This note describes the company's structure and primary business activities, focusing on its lending subsidiaries - Medallion Financial Corp. is a specialty finance company operating through wholly-owned subsidiaries, primarily Medallion Bank, which originates consumer loans for recreational vehicles, boats, collector cars, and home improvements[34](index=34&type=chunk) - Other subsidiaries include Medallion Capital (SBIC for mezzanine financing) and Medallion Funding LLC (historically taxi medallion lending)[35](index=35&type=chunk) - The Bank funds loans primarily with nationally originated time certificates of deposit and has not originated new taxi medallion loans since 2014[34](index=34&type=chunk) [(2) Summary of Significant Accounting Policies](index=11&type=section&id=(2)%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements - The consolidated financial statements are prepared in accordance with GAAP, requiring management estimates for items like goodwill, intangible assets, and allowance for credit losses[37](index=37&type=chunk) - Loans held for investment are reported at amortized cost, while loans held for sale are reported at the lower of amortized cost or fair value[47](index=47&type=chunk)[52](index=52&type=chunk) - The Company follows ASC 326 (CECL methodology) for allowance for credit losses, recognizing lifetime expected losses based on historical performance, qualitative adjustments, and macroeconomic factors[54](index=54&type=chunk) Bank Capital Ratios | Capital Ratio | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Tier 1 leverage ratio | 19.3% | 15.7% | | Common equity tier 1 capital ratio | 13.8% | 13.3% | | Tier 1 capital ratio | 19.5% | 16.1% | | Total capital ratio | 20.8% | 17.4% | - The Bank's Tier 1 leverage ratio was **19.3%** at June 30, 2025, exceeding the **15%** minimum required by **$106.9 million**, indicating a 'well-capitalized' status[69](index=69&type=chunk) [(3) Investment Securities](index=20&type=section&id=(3)%20INVESTMENT%20SECURITIES) This note details the company's investment securities portfolio, including fair values and unrealized gains or losses Investment Securities Available for Sale (in thousands) | Category | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------------------------------------- | :----------------------- | :--------------------------- | | Mortgage-backed securities | $42,930 | $36,701 | | State and municipalities | $18,433 | $15,938 | | Agency bonds | $166 | $2,166 | | **Total** | **$61,529** | **$54,805** | - Total investment securities increased to **$61.5 million** at June 30, 2025, from **$54.8 million** at December 31, 2024[76](index=76&type=chunk) - The Company had **$5.5 million** in gross unrealized losses on investment securities at June 30, 2025, primarily in mortgage-backed securities and state/municipal bonds, but does not intend to sell these securities and expects to recover amortized cost[76](index=76&type=chunk)[78](index=78&type=chunk) [(4) Loans and Allowance for Credit Losses](index=21&type=section&id=(4)%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note provides a breakdown of the loan portfolio and the methodology and balances for the allowance for credit losses Loan Portfolio Classification (in thousands) | Loan Type | June 30, 2025 Amount | June 30, 2025 % of Total | December 31, 2024 Amount | December 31, 2024 % of Total | | :------------------ | :------------------- | :----------------------- | :----------------------- | :--------------------------- | | Recreation | $1,486,047 | 60% | $1,422,403 | 57% | | Home improvement | $803,535 | 32% | $827,211 | 33% | | Commercial | $121,415 | 5% | $111,273 | 4% | | Taxi medallion | $1,564 | * | $1,909 | * |\n| Loans held for sale | $72,490 | 2% | $128,226 | 5% | | **Total Loans** | **$2,485,051** | **100%** | **$2,491,022** | **100%** | Allowance for Credit Losses (in thousands) | Loan Type | June 30, 2025 Amount | June 30, 2025 % of Allowance | June 30, 2025 % of Loan Category | | :--------------- | :------------------- | :--------------------------- | :------------------------------- | | Recreation | $75,040 | 70% | 5.05% | | Home improvement | $20,422 | 19% | 2.54% | | Commercial | $11,096 | 10% | 9.14% | | Taxi medallion | $338 | 1% | 21.62% | | **Total** | **$106,896** | **100%** | | - Total loans decreased slightly from **$2.49 billion** at December 31, 2024, to **$2.48 billion** at June 30, 2025. Recreation loans increased, while home improvement and loans held for sale decreased[81](index=81&type=chunk) - The total allowance for credit losses increased to **$106.9 million** at June 30, 2025, from **$97.4 million** at December 31, 2024, with recreation loans accounting for the largest portion[87](index=87&type=chunk)[90](index=90&type=chunk) Loans 90 Days or More Past Due (in thousands) | Loan Type | June 30, 2025 Amount | June 30, 2025 % of Total Loans | December 31, 2024 Amount | December 31, 2024 % of Total Loans | | :--------------- | :------------------- | :----------------------------- | :----------------------- | :--------------------------------- | | Recreation | $7,265 | 0.3% | $10,018 | 0.4% | | Home improvement | $1,292 | 0.1% | $1,386 | 0.1% | | Commercial | $20,402 | 0.8% | $16,337 | 0.7% | | **Total** | **$28,959** | **1.2%** | **$27,741** | **1.1%** | [(5) Funds Borrowed](index=25&type=section&id=(5)%20FUNDS%20BORROWED) This note details the company's various borrowing sources, including deposits and debt, and their associated costs Outstanding Funds Borrowed (in thousands) | Source | June 30, 2025 Amount | December 31, 2024 Amount | Weighted Average Contractual Rate (June 30, 2025) | | :---------------------------- | :------------------- | :----------------------- | :------------------------------------------------ | | Deposits | $2,009,767 | $2,091,663 | 3.81% | | Privately placed notes | $146,500 | $146,500 | 8.12% | | SBA debentures and borrowings | $70,500 | $70,250 | 3.81% | | Trust preferred securities | $33,000 | $33,000 | 6.70% | | Federal reserve and other borrowings | $40,000 | $35,000 | 4.50% | | **Total** | **$2,299,767** | **$2,376,413** | **4.14%** | - Total outstanding funds borrowed decreased from **$2.38 billion** at December 31, 2024, to **$2.30 billion** at June 30, 2025, primarily due to a reduction in deposits[100](index=100&type=chunk) - The weighted average contractual interest rate on total borrowings increased slightly to **4.14%** at June 30, 2025, from **4.09%** at December 31, 2024[100](index=100&type=chunk) - The Bank had **$40.0 million** utilized from its **$88.7 million** secured borrowing capacity with the Federal Reserve, collateralized by home improvement loans[104](index=104&type=chunk) [(6) Leases](index=27&type=section&id=(6)%20LEASES) This note provides information on the company's operating lease assets and liabilities, including related costs Operating Lease Information (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $5,946 | $6,922 | | Total operating lease liabilities | $6,331 | $7,422 | | Weighted average remaining lease term | 3.5 years | 4.1 years |\n| Weighted average discount rate | 5.55% | 5.56% | - Operating lease costs for the three and six months ended June 30, 2025, were **$0.56 million** and **$1.18 million**, respectively, showing a slight decrease from the prior year[114](index=114&type=chunk) [(7) Income Taxes](index=27&type=section&id=(7)%20INCOME%20TAXES) This note details the company's income tax provision, deferred tax assets, and liabilities Deferred Tax Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Total deferred tax assets | $23,329 | $21,777 | | Total deferred tax liabilities | $42,590 | $42,772 | | Deferred tax liability, net | $19,261 | $20,995 | Income Tax Provision (in thousands) | Component | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Current Federal | $5,757 | $4,792 | $10,418 | $6,521 | | Current State | $2,569 | $1,476 | $4,091 | $2,119 | | Deferred Federal | $(1,709) | $(1,916) | $(1,448) | $1,200 | | Deferred State | $(812) | $(570) | $(543) | $300 | | **Net provision for income taxes** | **$5,805** | **$3,782** | **$12,518** | **$10,140** | - The net deferred tax liability decreased to **$19.26 million** at June 30, 2025, from **$20.99 million** at December 31, 2024[118](index=118&type=chunk) - The total income tax provision increased for both the three and six months ended June 30, 2025, compared to the prior year periods, reflecting higher income before taxes[120](index=120&type=chunk) [(8) Stock Options and Restricted Stock](index=28&type=section&id=(8)%20STOCK%20OPTIONS%20AND%20RESTRICTED%20STOCK) This note describes the company's equity incentive plans, outstanding awards, and related compensation expenses - The Company's 2018 Equity Incentive Plan was amended to increase authorized shares, with **2,287,437 shares** remaining issuable as of June 30, 2025[123](index=123&type=chunk) Stock-Based Compensation Data (June 30, 2025) | Metric | Amount/Shares | | :-------------------------------------- | :------------ | | Outstanding stock options | 838,813 | | Unvested restricted stock | 727,415 | | Unvested performance stock units (PSUs) | 823,854 | | Unvested restricted stock units (RSUs) | 86,410 | | Vested, unissued RSUs | 323,977 | | Total unrecognized compensation cost | $8.1 million | Stock-Based Compensation Expense (in thousands) | Period | 2025 (3 months) | 2024 (3 months) | 2025 (6 months) | 2024 (6 months) | | :------------------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Total stock-based compensation expense | $1,700 | $1,600 | $3,400 | $3,100 | [(9) Segment Reporting](index=32&type=section&id=(9)%20SEGMENT%20REPORTING) This note presents financial information by the company's operating segments, including lending categories and corporate investments - The Company operates through four lending segments: recreation, home improvement, commercial, and taxi medallion lending, plus a non-operating segment for corporate and other investments[143](index=143&type=chunk) - The recreation lending segment is the largest, with **54%** of its portfolio in RVs, **21%** in boats, and **12%** in collector cars, concentrated in Texas (**16%**) and Florida (**10%**)[144](index=144&type=chunk) - The home improvement lending segment focuses on roofs (**30%**), swimming pools (**30%**), and windows (**11%**), with concentrations in Florida (**13%**) and Texas (**12%**)[144](index=144&type=chunk) Net Income After Taxes by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------- | :------ | :------ | :------- | :------- | | Recreation Lending | $9,949 | $6,711 | $17,963 | $12,652 | | Home Improvement Lending | $2,935 | $2,010 | $6,263 | $6,396 | | Commercial Lending | $3,298 | $481 | $8,207 | $4,058 | | Taxi Medallion Lending | $394 | $87 | $891 | $700 | | Corporate and Other Investments | $(2,909) | $(676) | $(6,131) | $(3,657) |\n| **Consolidated** | **$13,667** | **$8,613** | **$27,193** | **$20,149** | [(10) Commitments and Contingencies](index=36&type=section&id=(10)%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's contractual commitments and potential liabilities from legal proceedings - The Company has employment agreements with key officers, with future minimum payments of approximately **$8.6 million** expiring through 2028[163](index=163&type=chunk) - The SEC litigation regarding anti-fraud, books and records, internal controls, and anti-touting provisions from 2015-2017 was resolved with a Final Judgment on May 30, 2025. The Company paid a civil penalty of **$3.0 million** and agreed to compliance undertakings[165](index=165&type=chunk) - As of June 30, 2025, there were no other material commitments or legal proceedings expected to have a material adverse impact on the Company's financial condition or results of operations[164](index=164&type=chunk)[166](index=166&type=chunk) [(11) Related Party Transactions](index=37&type=section&id=(11)%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions and compensation involving related parties of the company - Jeffrey Rudnick, son of a Company director, serves as Executive Vice President with an annual salary of **$269,000** and received cash and equity bonuses[168](index=168&type=chunk) [(12) Fair Value of Financial Instruments](index=38&type=section&id=(12)%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note provides fair value estimates for various financial instruments held by the company - Fair value estimates for financial instruments are derived using various methods, including discounted cash flow for loans and market spreads for fixed-rate borrowings[171](index=171&type=chunk)[173](index=173&type=chunk) Fair Value of Financial Instruments (in thousands) | Financial Instrument | June 30, 2025 Carrying Amount | June 30, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :------------------------------- | :------------------------------ | :----------------------- | :-------------------------------- | :--------------------------- | | Cash, cash equivalents, and federal funds sold | $151,994 | $151,994 | $169,572 | $169,572 | | Investment securities | $61,529 | $61,529 | $54,805 | $54,805 | | Loans held for investment, net of allowance | $2,305,665 | $2,255,160 | $2,265,428 | $2,238,645 | | Loans held for sale | $72,490 | $75,573 | $128,226 | $133,244 | | Funds borrowed | $2,304,317 | $2,318,531 | $2,379,413 | $2,371,434 | [(13) Fair Value of Assets and Liabilities](index=39&type=section&id=(13)%20FAIR%20VALUE%20OF%20ASSETS%20AND%20LIABILITIES) This note categorizes assets and liabilities measured at fair value within a three-level hierarchy - The Company categorizes assets and liabilities measured at fair value into a three-level hierarchy based on the observability of valuation inputs[181](index=181&type=chunk) Fair Value Hierarchy for Assets (in thousands) | Category | June 30, 2025 Level 1 | June 30, 2025 Level 2 | June 30, 2025 Level 3 | June 30, 2025 Total | | :------------------ | :-------------------- | :-------------------- | :-------------------- | :------------------ | | Investment securities | $0 | $61,529 | $0 | $61,529 | | Equity securities | $1,763 | $0 | $0 | $1,763 | | **Total** | **$1,763** | **$61,529** | **$0** | **$63,292** | - Equity investments without readily determinable fair value are measured at cost less impairment plus or minus observable price changes, with cumulative impairment of **$6.3 million** as of June 30, 2025[42](index=42&type=chunk) [(14) Medallion Bank Preferred Stock (Non-controlling interest)](index=41&type=section&id=(14)%20MEDALLION%20BANK%20PREFERRED%20STOCK%20(Non-controlling%20interest)) This note details the preferred stock issuances and redemptions by Medallion Bank, impacting non-controlling interest - On May 29, 2025, Medallion Bank closed an initial public offering of Series G Preferred Stock, raising **$73.1 million** in net proceeds for general corporate purposes, including increasing capital levels and growing loan portfolios[196](index=196&type=chunk) - The Bank announced the redemption of all outstanding Series F Preferred Stock on July 1, 2025, for **$46.0 million**, which will result in a **$3.5 million** charge to earnings attributable to common shareholders[197](index=197&type=chunk) - The Bank also has Series E Preferred Stock outstanding, purchased by the U.S. Treasury under the SBLF program, with a **9%** dividend rate[199](index=199&type=chunk) [(15) Subsequent Events](index=42&type=section&id=(15)%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On July 1, 2025, Medallion Bank redeemed its Series F Preferred Stock for **$46.0 million**, resulting in a **$3.5 million** charge to earnings attributable to common shareholders[200](index=200&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=39&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and results of operations, highlighting performance for the three and six months ended June 30, 2025, compared to 2024. It covers key financial metrics, loan portfolio trends, interest rate sensitivity, and liquidity management, emphasizing growth in consumer lending, rising interest income and expenses, and strategic capital initiatives - The Company's focus and growth are in consumer finance and commercial lending, primarily through Medallion Bank and Medallion Capital[203](index=203&type=chunk) - Net interest income is the primary driver of earnings, influenced by loan portfolio yield and the cost of borrowed funds, which include bank certificates of deposit, SBA debentures, and privately placed notes[204](index=204&type=chunk) - Total assets were **$2.88 billion** as of June 30, 2025, with consumer loans representing **95%** of the gross loan portfolio[203](index=203&type=chunk) [Company Background](index=39&type=section&id=COMPANY%20BACKGROUND) This section outlines Medallion Financial Corp.'s business model, strategic focus, and primary operating subsidiaries - Medallion Financial Corp. is a specialty finance company with a strategic focus on consumer finance and commercial lending, primarily through Medallion Bank and Medallion Capital[203](index=203&type=chunk) - The Bank originates consumer loans for RVs, boats, collector cars, and home improvements, and provides services to fintech partners, while Medallion Capital focuses on mezzanine financing[203](index=203&type=chunk) - The Bank launched a strategic partnership program in 2019 to provide lending services to fintech companies[208](index=208&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section discusses accounting policies requiring significant management judgment and estimates, such as credit losses and goodwill - Critical accounting policies include the allowance for credit losses and goodwill and intangible assets, which involve significant management judgments and uncertainties[210](index=210&type=chunk) - No material changes in critical accounting policies and estimates have occurred since the Annual Report on Form 10-K for December 31, 2024[210](index=210&type=chunk) [Recently Issued and Adopted Accounting Standards](index=44&type=section&id=RECENTLY%20ISSUED%20AND%20ADOPTED%20ACCOUNTING%20STANDARDS) This section reviews new accounting pronouncements and their expected or actual impact on the company's financial statements - ASU 2023-09 (Income Taxes) is effective for annual periods after December 15, 2024, and is not expected to have a material impact[211](index=211&type=chunk) - ASU 2024-03 (Expense Disaggregation of Income Statement Expenses) requires additional disaggregation of expenses and is effective for public business entities after December 15, 2026, with the Company currently assessing its impact[212](index=212&type=chunk) [Control Statutes and Regulations](index=44&type=section&id=CONTROL%20STATUTES%20AND%20REGULATIONS) This section describes the regulatory environment governing the company's operations, including banking laws and capital requirements - The Bank is an FDIC-insured industrial bank subject to federal and Utah laws and regulations, including capital requirements and restrictions on transactions with affiliates[213](index=213&type=chunk) - Acquiring control (e.g., **25%** or more of voting stock, or **10%** with certain control factors) of the Bank or Medallion Financial Corp. requires prior regulatory approval[213](index=213&type=chunk)[214](index=214&type=chunk) - The Company's operations are subject to various federal, state, and local laws regulating credit granting, interest rates, disclosures, collection practices, and anti-discrimination[215](index=215&type=chunk) [Average Balances and Rates](index=46&type=section&id=AVERAGE%20BALANCES%20AND%20RATES) This section analyzes the average balances and yields of interest-earning assets and costs of interest-bearing liabilities Average Yield on Interest-Earning Assets | Asset Category | Q2 2025 Yield | Q2 2024 Yield | YTD 2025 Yield | YTD 2024 Yield | | :------------- | :------------ | :------------ | :------------- | :------------- | | Total Loans | 12.27% | 11.98% | 12.16% | 11.89% | | Total Interest-Earning Assets (net of allowance) | 12.23% | 11.94% | 12.16% | 11.84% | Average Cost of Interest-Bearing Liabilities | Liability Category | Q2 2025 Cost | Q2 2024 Cost | YTD 2025 Cost | YTD 2024 Cost | | :----------------- | :----------- | :----------- | :------------ | :------------ | | Deposits | 3.84% | 3.41% | 3.83% | 3.31% | | Total Interest-Bearing Liabilities | 4.20% | 3.82% | 4.19% | 3.75% | - The yield on total loans increased by **29 basis points** for Q2 2025 and **27 basis points** for YTD 2025, reflecting higher rates on new consumer originations[222](index=222&type=chunk) - The average interest cost for Q2 2025 and YTD 2025 increased by **38** and **44 basis points**, respectively, primarily due to higher costs associated with deposits in the current interest rate environment[224](index=224&type=chunk) [Rate/Volume Analysis](index=48&type=section&id=RATE%2FVOLUME%20ANALYSIS) This section explains changes in interest income and expense due to fluctuations in interest rates and asset/liability volumes - The increase in interest income for Q2 and YTD 2025 was mainly driven by the growth in consumer loan portfolios and higher yields on interest-earning assets[227](index=227&type=chunk) - The increase in interest expense was primarily due to higher borrowing costs, especially for deposits, as older deposits mature and are replaced at current market rates, and an overall increase in borrowings[227](index=227&type=chunk) - The Company expects borrowing costs to continue increasing as new deposits and funds are secured at prevailing higher rates[230](index=230&type=chunk) [Loans](index=49&type=section&id=LOANS) This section provides an overview of loan portfolio trends, including originations and segment performance - The recreation segment continued to grow, while the home improvement lending segment experienced a decline in the three and six months ended June 30, 2025, compared to the prior year[233](index=233&type=chunk) Gross Loan Originations (in thousands) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------ | :------ | :------ | :------- | :------- | | Recreation | $142,789 | $209,563 | $229,622 | $315,328 | | Home improvement | $54,253 | $67,990 | $103,049 | $119,566 | | Commercial | $9,368 | $7,000 | $19,075 | $7,000 | | Strategic partnership | $168,637 | $24,288 | $304,877 | $40,034 | | **Total** | **$375,047** | **$309,091** | **$656,695** | **$482,178** | - Strategic partnership loan originations significantly increased in 2025, contributing to the overall growth in total originations[234](index=234&type=chunk) [Provision and Allowance for Credit Losses](index=51&type=section&id=PROVISION%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This section details the provision for credit losses and the allowance balance, reflecting expected loan losses Allowance for Credit Losses (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Total allowance for credit losses | $106,896 | $97,368 | | % of total loans held for investment | 4.43% | 4.12% | Provision for Credit Losses (in thousands) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------------- | :------ | :------ | :------- | :------- | | Total provision for credit losses | $21,562 | $18,577 | $43,576 | $35,778 | | Recreation loans provision | $15,336 | $15,795 | $32,206 | $32,825 | | Home improvement loans provision | $3,934 | $3,279 | $6,779 | $4,177 | | Commercial loans provision | $2,912 | $478 | $6,026 | $694 | - The allowance for credit losses increased by **31 basis points** as a percentage of total loans from December 31, 2024, to June 30, 2025[246](index=246&type=chunk) - Provisions for credit losses increased for both the three and six months ended June 30, 2025, driven by rising loss rates and expected losses in recreation loans, partially offset by decreases in home improvement loans[238](index=238&type=chunk) [Segment Results](index=53&type=section&id=SEGMENT%20RESULTS) This section presents the financial performance and key metrics for each of the company's operating segments [Recreation Lending](index=53&type=section&id=Recreation%20Lending) This section details the performance and portfolio characteristics of the company's recreation loan segment - Recreation lending is a significant income source, accounting for **66%** of total interest income for Q2 and YTD 2025[251](index=251&type=chunk) - The recreation loan portfolio totaled **$1.5 billion** as of June 30, 2025, with an average interest rate of **15.12%**, up **32 basis points** from a year ago[255](index=255&type=chunk) Recreation Loan Originations (in thousands) | Period | 2025 | 2024 | 2023 | | :------------ | :-------- | :-------- | :-------- | | First Quarter | $86,833 | $105,765 | $101,681 | | Second Quarter | $142,789 | $209,563 | $190,007 | | **Year Ended** | **$229,622** | **$526,634** | **$447,039** | - Origination volumes decreased in 2025, reflecting a focus on originating loans expected to perform better during economic downturns[256](index=256&type=chunk) - Non-prime originations constituted **36%** of total originations for the six months ended June 30, 2025[259](index=259&type=chunk) [Home Improvement Lending](index=55&type=section&id=Home%20Improvement%20Lending) This section details the performance and portfolio characteristics of the company's home improvement loan segment - The home improvement loan portfolio totaled **$803.5 million** as of June 30, 2025, with an average interest rate of **9.87%**, up **16 basis points** from a year ago[265](index=265&type=chunk) Home Improvement Loan Originations (in thousands) | Period | 2025 | 2024 | 2023 | | :------------ | :-------- | :-------- | :-------- | | First Quarter | $48,796 | $51,576 | $94,981 | | Second Quarter | $54,253 | $67,990 | $117,035 | | **Year Ended** | **$103,049** | **$298,642** | **$357,394** | - Origination volumes were lower in 2025, reflecting a focus on higher-performing loans during economic downturns[266](index=266&type=chunk) - The allowance for credit losses increased by **11%** from a year ago, reflecting higher delinquency and potential losses[265](index=265&type=chunk) [Commercial Lending](index=57&type=section&id=Commercial%20Lending) This section details the performance and portfolio characteristics of the company's commercial loan segment - The commercial lending segment originates senior and subordinated mezzanine loans nationwide, with a concentration in California (**29%** of the portfolio)[273](index=273&type=chunk)[277](index=277&type=chunk) - Net gains on equity investments were **$6.1 million** for Q2 2025 and **$15.5 million** for YTD 2025, significantly higher than the prior year[275](index=275&type=chunk) - Provision for credit losses in commercial lending increased substantially to **$2.9 million** for Q2 2025 and **$6.0 million** for YTD 2025, reflecting specific commercial loan assessments[275](index=275&type=chunk) [Taxi Medallion Lending](index=58&type=section&id=Taxi%20Medallion%20Lending) This section details the performance and portfolio characteristics of the company's taxi medallion loan segment - The taxi medallion lending segment operates primarily in the New York City metropolitan area, with a consistent valuation of **$79,500** for New York City and Newark medallions[278](index=278&type=chunk) - All taxi medallion loans are on nonaccrual status, with underperforming loans transferred to loan collateral in process of foreclosure[278](index=278&type=chunk) - Net recoveries and gains from taxi medallion and related assets were **$1.4 million** for Q2 2025 and **$3.0 million** for YTD 2025, reflecting collection efforts[279](index=279&type=chunk) [Corporate and Other Investments](index=59&type=section&id=Corporate%20and%20Other%20Investments) This section covers financial results for corporate activities, equity investments, and strategic partnership loans - This segment includes equity and investment securities, legacy commercial business, and unallocated corporate items, with all goodwill related to the Bank's recreation and home improvement segments[284](index=284&type=chunk) - Strategic partnership loans, issued by the Bank and sold to third parties without recourse, significantly increased to **$12.3 million** at June 30, 2025, from **$1.3 million** at June 30, 2024[285](index=285&type=chunk) Strategic Partnership Loan Originations (in thousands) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----- | :------ | :------ | :------- | :------- | | Amount | $168,637 | $24,288 | $304,900 | $40,000 | [Summary Consolidated Financial Data](index=59&type=section&id=SUMMARY%20CONSOLIDATED%20FINANCIAL%20DATA) This section provides a concise overview of key consolidated financial ratios and performance metrics Selected Consolidated Financial Ratios | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------------- | :------ | :------ | :------- | :------- | | Return on average assets | 1.93% | 1.30% | 1.93% | 1.55% | | Return on average equity | 11.13% | 8.25% | 11.63% | 9.70% | | Net interest margin, gross | 8.09% | 8.12% | 8.01% | 8.11% | | Equity to assets | 18.49% | 15.31% | 18.49% | 15.31% | | Debt to equity | 4.3x | 5.4x | 4.3x | 5.4x | | Net charge-offs as a % of average loans receivable | 2.44% | 2.20% | 2.77% | 2.68% | | Reserve coverage ratio | 4.43% | 3.76% | 4.43% | 3.76% | - Return on average assets and equity improved for both the three and six months ended June 30, 2025, compared to the prior year periods[289](index=289&type=chunk) - Equity to assets ratio increased to **18.49%** at June 30, 2025, from **15.31%** at June 30, 2024, while the debt to equity ratio improved from **5.4x** to **4.3x**[289](index=289&type=chunk) [Consolidated Results of Operations](index=60&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) This section summarizes the company's overall financial performance, including net income, interest income, and expenses Key Financial Performance (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------------- | :------ | :------ | :------- | :------- | | Net income attributable to shareholders | $11,100 | $7,100 | $23,100 | $17,100 | | Diluted EPS | $0.46 | $0.30 | $0.96 | $0.73 | | Total interest income | $77,400 | $70,700 | $152,900 | $137,800 | | Total interest expense | $24,100 | $20,800 | $48,100 | $40,000 | | Net interest income | $53,400 | $49,900 | $104,800 | $97,800 | | Provision for credit losses | $21,600 | $18,600 | $43,600 | $35,800 | | Net other income | $9,200 | $1,100 | $20,800 | $6,500 | | Operating expenses | $21,500 | $20,000 | $42,300 | $38,200 | - Net income attributable to shareholders and diluted EPS significantly increased for both the three and six months ended June 30, 2025, compared to the prior year[292](index=292&type=chunk) - Net interest margin before allowance for credit losses slightly tightened to **8.09%** for Q2 2025 and **8.01%** for YTD 2025, reflecting rising borrowing costs partially offset by higher loan yields[299](index=299&type=chunk) - Net other income saw a substantial increase, driven by higher gains on equity investments and strategic partnership fees[300](index=300&type=chunk) [Asset/Liability Management](index=61&type=section&id=ASSET%2FLIABILITY%20MANAGEMENT) This section discusses the company's strategies for managing interest rate risk and liquidity - The Company is exposed to interest rate risk due to mismatches in repricing of interest-earning assets and interest-bearing liabilities[303](index=303&type=chunk) - The one-year cumulative interest rate gap was a negative **$563.4 million**, or **21%** of interest rate sensitive assets, at June 30, 2025, indicating more repricing liabilities than assets within one year[309](index=309&type=chunk) - A hypothetical immediate **1%** increase in interest rates would result in an annualized increase to net income of **$1.7 million** as of June 30, 2025[328](index=328&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section outlines the company's sources of liquidity and its capital management strategies - Sources of liquidity include brokered certificates of deposit, SBA debenture commitments, loan amortization, private/public debt issuances, and subsidiary preferred securities[311](index=311&type=chunk) - Medallion Bank raised **$73.1 million** in net proceeds from its Series G Preferred Stock IPO in May 2025 to increase capital and grow loan portfolios[312](index=312&type=chunk) - The Company repurchased **48,166 shares** of common stock for **$0.5 million** during Q2 2025, with **$14.4 million** remaining authorized under its stock repurchase program[336](index=336&type=chunk) Contractual Obligations (in thousands) as of June 30, 2025 | Obligation Type | Less than 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | More than 5 years | Total | | :-------------------------- | :--------------- | :-------- | :-------- | :-------- | :-------- | :---------------- | :---- | | Borrowings | $750,778 | $547,954 | $439,412 | $241,129 | $216,994 | $103,500 | $2,299,767 | | Operating lease obligations | $2,556 | $2,275 | $638 | $582 | $598 | $247 | $6,896 |\n| **Total** | **$753,334** | **$550,229** | **$440,050** | **$241,711** | **$217,592** | **$103,747** | **$2,306,663** | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=61&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) There have been no material changes in the Company's quantitative and qualitative disclosures about market risk since its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in market risk disclosures since the last Annual Report on Form 10-K[338](index=338&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=61&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended June 30, 2025 [Evaluation of Disclosure Controls and Procedures](index=66&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of the reporting date - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[339](index=339&type=chunk) [Changes in Internal Control over Financial Reporting](index=66&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that there were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[340](index=340&type=chunk) [PART II—OTHER INFORMATION](index=62&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides additional information not included in the financial statements, such as legal proceedings and risk factors [ITEM 1. LEGAL PROCEEDINGS](index=62&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 10, 'Commitments and Contingencies,' for details on the Company's legal proceedings, including the recently resolved SEC litigation - Details of legal proceedings are provided in Note 10 to the consolidated financial statements[342](index=342&type=chunk) [ITEM 1A. RISK FACTORS](index=62&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the Company's risk factors since those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes in risk factors since the Annual Report on Form 10-K for December 31, 2024[343](index=343&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=62&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the Company's stock repurchase program, including shares repurchased during the quarter and the remaining authorization - The Company repurchased **48,166 shares** of common stock at an aggregate cost of **$0.5 million** during the quarter ended June 30, 2025[344](index=344&type=chunk)[345](index=345&type=chunk) - As of June 30, 2025, **$14,406,534** remained authorized for repurchase under the stock repurchase program[344](index=344&type=chunk)[345](index=345&type=chunk) [ITEM 5. OTHER INFORMATION](index=62&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during the quarter[346](index=346&type=chunk) [ITEM 6. EXHIBITS](index=63&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including amendments to the equity incentive plan, certifications, and XBRL-related documents - Exhibits include Amendment No. 3 to Medallion Financial Corp. 2018 Equity Incentive Plan, certifications from CEO and CFO, and XBRL instance documents[347](index=347&type=chunk) [SIGNATURES](index=64&type=section&id=SIGNATURES) The report is duly signed on behalf of Medallion Financial Corp. by Alvin Murstein, Chairman and Chief Executive Officer, and Anthony N. Cutrone, Executive Vice President and Chief Financial Officer, as of August 5, 2025 - The report was signed by Alvin Murstein (Chairman and CEO) and Anthony N. Cutrone (EVP and CFO) on August 5, 2025[350](index=350&type=chunk)[351](index=351&type=chunk)

[Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) Medallion Financial Corp. reported a 56% increase in Q2 2025 net income to $11.1 million, driven by strong core lending and strategic partnerships, alongside a 10% rise in net book value per share [Introduction](index=1&type=section&id=Introduction) Medallion Financial Corp. announced its Q2 2025 financial results, highlighting a significant increase in net income and strong performance across its lending businesses - Medallion Financial Corp. (MFIN) is a specialty finance company originating and servicing loans in various consumer and commercial industries, along with offering loan origination services to fintech strategic partners[2](index=2&type=chunk) [Executive Commentary](index=1&type=section&id=Executive%20Commentary) Andrew Murstein, President and COO, expressed satisfaction with the strong Q2 2025 results, attributing the 56% net income increase to core lending business strength and disciplined execution. He highlighted contributions from recreation, home improvement, and commercial lending, along with significant growth in strategic partners loan program - Net income increased by **56%** year-over-year in Q2 2025, reflecting strong core lending businesses and disciplined execution[4](index=4&type=chunk) - Meaningful contributions from recreation, home improvement, and commercial lending segments, supported by solid originations and higher interest income[5](index=5&type=chunk) - Commercial division consistently generated net gains from equity investments, totaling **$27.6 million** over the past eight quarters[5](index=5&type=chunk) - Strategic partners loan program in Medallion Bank grew significantly, with **$169 million** in originations in the quarter compared to **$24 million** a year ago[5](index=5&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company reported a 56% increase in net income to $11.1 million, a 7% rise in net interest income, and 10% growth in net book value per share. Loan originations also saw substantial growth, particularly from strategic partnerships Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Net Income | $11.1 million | $7.1 million | 56% | | EPS | $0.46 | $0.30 | 53.3% | | Net Interest Income | $53.4 million | $49.9 million | 7% | | Loan Originations | $375.0 million | $309.1 million | 21.3% | | Strategic Partnership Loan Originations | $168.6 million | $24.3 million | 594% | | Loan Portfolio (as of June 30) | $2.485 billion | $2.386 billion | 4% | | Net Book Value per Share (as of June 30) | $16.77 | $15.25 | 10% | - Net interest margin (NIM) on net loans was **8.42%**, consistent with the prior year quarter[6](index=6&type=chunk) - Credit loss provision increased to **$21.6 million** from **$18.6 million** in the prior year quarter[6](index=6&type=chunk) - The Company declared and paid a quarterly cash dividend of **$0.12 per share** and repurchased **48,166 shares** of common stock for **$0.5 million**[6](index=6&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Highlights) Medallion Financial Corp. saw varied performance across lending segments, with recreation and home improvement portfolios growing, commercial lending generating significant equity gains, and strategic partnerships experiencing dramatic origination growth [Recreation Lending Segment](index=2&type=section&id=Recreation%20Lending%20Segment) Originations in the recreation lending segment decreased, but the loan portfolio grew 3% year-over-year, representing 62% of total loans. Interest income increased by 8%, while 90+ days past due loans and allowance for credit loss also rose Recreation Lending Segment Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Originations | $142.8 million | $209.6 million | -31.9% | | Loans (June 30) | $1.546 billion | $1.497 billion | 3% | | Interest Income | $51.1 million | $47.5 million | 8% | | Average Interest Rate | 15.12% | 14.80% | +0.32 pp | | 90+ Days Past Due | $7.3 million (0.49%) | $5.9 million (0.41%) | +23.7% | | Allowance for Credit Loss | 5.05% | 4.35% | +0.70 pp | - Average loan size was **$21,000** with a weighted average FICO score of **684** at origination[9](index=9&type=chunk) [Home Improvement Lending Segment](index=2&type=section&id=Home%20Improvement%20Lending%20Segment) Home improvement loan originations declined, but the portfolio grew 4% to $803.5 million, comprising 32% of total loans. Interest income increased by 14%, and the average interest rate rose. 90+ days past due loans remained stable in absolute terms but slightly decreased as a percentage Home Improvement Lending Segment Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Originations | $54.3 million | $68.0 million | -20.2% | | Loans (June 30) | $803.5 million | $773.2 million | 4% | | Interest Income | $20.1 million | $17.7 million | 14% | | Average Interest Rate | 9.87% | 9.71% | +0.16 pp | | 90+ Days Past Due | $1.3 million (0.16%) | $1.3 million (0.17%) | -0.01 pp | | Allowance for Credit Loss | 2.54% | 2.38% | +0.16 pp | - Average loan size was **$22,000** with a weighted average FICO score of **769** at origination[9](index=9&type=chunk) [Commercial Lending Segment](index=2&type=section&id=Commercial%20Lending%20Segment) Commercial loan originations were $9.4 million, and the portfolio grew to $121.4 million. The segment recognized significant net gains from equity investments of $6.1 million during the quarter Commercial Lending Segment Performance | Metric | Q2 2025 | Q2 2024 | Change | | :----- | :------ | :------ | :----- | | Originations | $9.4 million | N/A | N/A | | Loans (June 30) | $121.4 million | $110.2 million | +10.2% | | Net Gains from Equity Investments | $6.1 million | N/A | N/A | | Average Interest Rate | 13.43% | 13.05% | +0.38 pp | - Average loan size was **$3.6 million**, invested in **34** portfolio companies[9](index=9&type=chunk) [Strategic Partnerships](index=2&type=section&id=Strategic%20Partnerships) Strategic partnership loan originations surged dramatically to $168.6 million from $24.3 million a year ago. Fees generated from these partnerships also increased, with an average loan holding period of 5 days Strategic Partnerships Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Originations | $168.6 million | $24.3 million | 594% | | Fees Generated | $0.8 million | $0.5 million | 60% | - Total strategic partnership loans held as of quarter-end were **$12.3 million**[9](index=9&type=chunk) - Average loan holding period for strategic partnership loans was **5 days**[9](index=9&type=chunk) [Taxi Medallion Lending Segment](index=2&type=section&id=Taxi%20Medallion%20Lending%20Segment) The company collected $2.3 million in cash on taxi medallion-related assets, resulting in $1.4 million in net recoveries and gains. Total net taxi medallion assets significantly declined by 41% year-over-year, now representing less than 0.3% of total assets Taxi Medallion Lending Segment Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Cash Collected | $2.3 million | N/A | N/A | | Net Recoveries & Gains | $1.4 million | N/A | N/A | | Total Net Assets (June 30) | $5.9 million | N/A | -41% YoY | - Taxi medallion assets represent less than **0.3%** of the Company's total assets as of June 30, 2025[9](index=9&type=chunk) [Loan Portfolio Overview](index=3&type=section&id=Loan%20Portfolio) The total loan portfolio stood at $2.485 billion as of June 30, 2025, with recreation and home improvement loans comprising the majority, reflecting a slight decrease from year-end 2024 but an increase year-over-year [Loan Portfolio Composition](index=3&type=section&id=Loan%20Portfolio%20Composition) As of June 30, 2025, the total loan portfolio was $2.485 billion, slightly down from December 31, 2024, but up from a year ago. Recreation loans continue to be the largest component, followed by home improvement loans Loan Portfolio Composition (Dollars in thousands) | Loan Type | June 30, 2025 (Amount) | June 30, 2025 (% of Total) | December 31, 2024 (Amount) | December 31, 2024 (% of Total) | | :-------------------------- | :----------------------- | :------------------------- | :------------------------- | :--------------------------- | | Loans held for investment: | | | | | | Recreation | $1,486,047 | 60% | $1,422,403 | 57% | | Home improvement | $803,535 | 32% | $827,211 | 33% | | Commercial | $121,415 | 5% | $111,273 | 4% | | Taxi medallion | $1,564 | * | $1,909 | * | | Total loans held for investment | $2,412,561 | 97% | $2,362,796 | 95% | | Loans held for sale: | | | | | | Recreation | $60,205 | 2% | $120,840 | 5% | | Strategic partnership | $12,285 | * | $7,386 | * | | Total loans held for sale | $72,490 | 3% | $128,226 | 5% | | **Total loans and loans held for sale** | **$2,485,051** | **100%** | **$2,491,022** | **100%** | [Capital Allocation & Shareholder Returns](index=3&type=section&id=Capital%20Allocation) The company maintained its quarterly dividend at $0.12 per share, repurchased $0.5 million in stock, and saw total assets increase to $2.880 billion, primarily due to a prepaid expense for preferred stock redemption [Quarterly Dividend](index=3&type=section&id=Quarterly%20Dividend) The Board declared a Q3 2025 dividend of $0.12 per share, consistent with Q2 2025 but 20% higher than the same quarter last year Quarterly Dividend History | Dividend Period | Per Share | Record Date | Payment Date | | :-------------- | :-------- | :---------- | :----------- | | Q3 2025 | $0.12 | 8/15/2025 | 8/29/2025 | | Q2 2025 | $0.12 | 5/15/2025 | 5/30/2025 | | Q1 2025 | $0.11 | 3/17/2025 | 3/31/2025 | | Total: Year 2025 (YTD) | $0.35 | | | | Total: Year 2024 | $0.41 | | | | Total: Year 2023 | $0.34 | | | | Total: Year 2022 | $0.32 | | | - The Q3 2025 dividend of **$0.12 per share** remains unchanged from Q2 2025 and is **20% higher** than the same quarter last year[11](index=11&type=chunk) [Stock Repurchase Plan](index=3&type=section&id=Stock%20Repurchase%20Plan) The company repurchased 48,166 shares for $0.5 million during Q2 2025, with $14.4 million remaining under its $40 million stock repurchase program Stock Repurchase Activity (Q2 2025) | Metric | Q2 2025 | | :----- | :------ | | Shares Repurchased | 48,166 | | Average Cost per Share | $9.44 | | Total Cost | $0.5 million | - As of June 30, 2025, the Company had **$14.4 million** remaining under its **$40 million** stock repurchase program[14](index=14&type=chunk) [Balance Sheet Overview](index=3&type=section&id=Balance%20Sheet%20Overview) As of June 30, 2025, total assets increased to $2.880 billion, primarily due to an increase in prepaid expenses related to the redemption of Medallion Bank's Series F preferred stock. Total liabilities also saw a slight increase Balance Sheet Highlights | Metric | June 30, 2025 | June 30, 2024 | Change (%) | | :----- | :------------ | :------------ | :--------- | | Cash & Cash Equivalents (incl. investment securities) | $213.5 million | $213.8 million | -0.1% | | Total Assets | $2.880 billion | $2.761 billion | 4.3% | | Total Liabilities | $2.347 billion | $2.338 billion | 0.4% | - The increase in total assets is largely due to an increase in prepaid expense resulting from the redemption of Medallion Bank's Series F preferred stock on July 1, 2025[13](index=13&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) The financial statements detail a Q2 2025 net income of $11.1 million, with total assets at $2.880 billion and book value per share at $16.77, reflecting strong operational performance and balance sheet health [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet shows total assets of $2.880 billion as of June 30, 2025, with net loans receivable at $2.306 billion. Total liabilities were $2.347 billion, and total equity was $532.6 million. Book value per share increased to $16.77 Consolidated Balance Sheets (Dollars in thousands, except share and per share data) | (Dollars in thousands, except share and per share data) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------------------- | :-------------- | :---------------- | :-------------- | | **Assets** | | | | | Cash, cash equivalents, and federal funds sold | $151,994 | $169,572 | $157,961 | | Investment securities | $61,529 | $54,805 | $55,830 | | Equity investments | $8,097 | $9,198 | $10,795 | | Loans held for sale | $72,490 | $128,226 | — | | Loans | $2,412,561 | $2,362,796 | $2,385,590 | | Allowance for credit losses | $(106,896) | $(97,368) | $(89,788) | | Net loans receivable | $2,305,665 | $2,265,428 | $2,295,802 | | Goodwill and intangible assets, net | $169,227 | $169,949 | $170,672 | | Property, equipment, and right-of-use lease asset, net | $11,890 | $13,756 | $14,094 | | Accrued interest receivable | $15,294 | $15,314 | $13,299 | | Loan collateral in process of foreclosure | $9,007 | $9,932 | $9,359 | | Other assets | $74,801 | $32,426 | $33,064 | | **Total assets** | **$2,879,994** | **$2,868,606** | **$2,760,876** | | **Liabilities** | | | | | Deposits | $2,009,176 | $2,090,071 | $2,006,782 | | Long-term debt | $199,928 | $232,159 | $230,803 | | Short-term borrowings | $86,750 | $49,000 | $37,500 | | Deferred tax liabilities, net | $19,261 | $20,995 | $22,394 | | Operating lease liabilities | $4,041 | $5,128 | $6,071 | | Accrued interest payable | $5,746 | $8,231 | $7,945 | | Accounts payable and accrued expenses | $22,527 | $24,064 | $26,592 | | **Total liabilities** | **$2,347,429** | **$2,429,648** | **$2,338,087** | | **Equity** | | | | | Total stockholders' equity | $389,896 | $370,170 | $354,001 | | Non-controlling interest in consolidated subsidiaries | $142,669 | $68,788 | $68,788 | | **Total equity** | **$532,565** | **$438,958** | **$422,789** | | **Total liabilities and equity** | **$2,879,994** | **$2,868,606** | **$2,760,876** | | Number of shares outstanding | 23,246,593 | 23,135,624 | 23,211,990 | | Book value per share | $16.77 | $16.00 | $15.25 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, Medallion Financial Corp. reported net interest income of $53.4 million and total net income attributable to Medallion Financial Corp. of $11.1 million, or $0.46 diluted EPS. Other income significantly increased due to gains on equity investments and strategic partnership fees Consolidated Statements of Operations (Dollars in thousands, except share and per share data) | (Dollars in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $77,442 | $70,704 | $152,867 | $137,774 | | Total interest expense | $24,072 | $20,836 | $48,085 | $39,989 | | Net interest income | $53,370 | $49,868 | $104,782 | $97,785 | | Provision for credit losses | $21,562 | $18,577 | $43,576 | $35,778 | | Net interest income after provision for credit losses | $31,808 | $31,291 | $61,206 | $62,007 | | Other income: | | | | | | Gain (loss) on equity investments, net | $6,096 | $(512) | $15,526 | $3,655 | | Gain on sale of recreation loans | $1,304 | — | $1,304 | — | | Gain on taxi medallion assets, net | $749 | $242 | $1,592 | $830 | | Strategic partnership fees | $787 | $480 | $1,472 | $806 | | Other income | $273 | $889 | $914 | $1,211 | | Total other income, net | $9,209 | $1,099 | $20,808 | $6,502 | | Total other expenses | $21,545 | $19,995 | $42,303 | $38,220 | | Income before income taxes | $19,472 | $12,395 | $39,711 | $30,289 | | Income tax provision | $5,805 | $3,782 | $12,518 | $10,140 | | Net income after taxes | $13,667 | $8,613 | $27,193 | $20,149 | | Less: income attributable to the non-controlling interest | $2,598 | $1,512 | $4,110 | $3,024 | | **Total net income attributable to Medallion Financial Corp.** | **$11,069** | **$7,101** | **$23,083** | **$17,125** | | Basic net income per share | $0.49 | $0.31 | $1.02 | $0.76 | | Diluted net income per share | $0.46 | $0.30 | $0.96 | $0.73 | | Dividends declared per common share | $0.12 | $0.10 | $0.24 | $0.20 | [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on the upcoming Q2 earnings conference call, an overview of Medallion Financial Corp.'s business, a cautionary note on forward-looking statements, and investor relations contact information [Conference Call Details](index=4&type=section&id=Conference%20Call%20Information) Medallion Financial Corp. will host a conference call on July 31, 2025, at 9:00 a.m. Eastern time to discuss its Q2 financial results. Replay information is also provided - A conference call to discuss Q2 financial results will be held on Thursday, July 31, 2025, at **9:00 a.m. Eastern time**[15](index=15&type=chunk) - A link to the live audio webcast and replay information will be available on the Company's IR website[16](index=16&type=chunk)[17](index=17&type=chunk) [About Medallion Financial Corp.](index=4&type=section&id=About%20Medallion%20Financial%20Corp.) Medallion Financial Corp. is a specialty finance company headquartered in New York City, originating and servicing consumer and mezzanine loans in industries like recreation and home improvement. Its largest subsidiary, Medallion Bank, is in Salt Lake City - Medallion Financial Corp. (NASDAQ: MFIN) originates and services a growing portfolio of consumer loans and mezzanine loans in recreation (towable RVs and marine) and home improvement (replacement roofs, swimming pools, and windows) industries[18](index=18&type=chunk) - The company is headquartered in New York City, NY, and its largest subsidiary, Medallion Bank, is headquartered in Salt Lake City, Utah[18](index=18&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section cautions that the press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ significantly due to various factors, including economic conditions and other risks detailed in the company's 2024 Annual Report on Form 10-K - This press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, net interest income and expenses, other expenses, earnings, growth, and growth strategy[19](index=19&type=chunk) - Medallion's actual results may differ significantly from forward-looking statements due to factors such as the current economy, inflation, recession risk, tariffs, and other risks discussed in the **2024 Annual Report on Form 10-K**[19](index=19&type=chunk) [Investor Relations Contact](index=4&type=section&id=Company%20Contact) Contact information for Medallion Financial Corp.'s internal Investor Relations and external Investor Relations firm, The Equity Group Inc., is provided for inquiries - Contact information for Investor Relations is provided via email (InvestorRelations@medallion.com) and phone (**212-328-2176**)[20](index=20&type=chunk) - External Investor Relations support is provided by The Equity Group Inc., with contacts Lena Cati and Val Ferraro[20](index=20&type=chunk)

Company Overview - Medallion Bank is an FDIC-insured bank that specializes in providing consumer loans for recreational vehicles, boats, and home improvements, as well as loan origination services to fintech strategic partners [5] Redemption Announcement - Medallion Bank announced that it will redeem all outstanding shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F on July 1, 2025, at a redemption price of $25.00 per share [1] - The redemption price does not include declared and unpaid dividends, which will be paid separately on the same date to holders of record [2] Post-Redemption Details - After the redemption date, the Series F Preferred Stock will no longer be considered outstanding, and dividends will cease to accrue [3] - The shares are held in book-entry form through The Depository Trust Company and will be redeemed according to DTC procedures [3] Contact Information - Investors seeking information about the redemption payment should contact the bank or their broker [4]

Company Overview - Medallion Bank is an FDIC-insured bank that specializes in providing consumer loans for recreational vehicles, boats, and home improvements, as well as loan origination services to fintech strategic partners [5]. Redemption Announcement - Medallion Bank announced that it will redeem all outstanding shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, on July 1, 2025, at a redemption price of $25.00 per share [1]. - The redemption price does not include declared and unpaid dividends, which will be paid separately on the same date to holders of record [2]. Post-Redemption Details - After the redemption date, the Series F Preferred Stock will no longer be considered outstanding, and dividends will cease to accrue [3]. - The shares are held in book-entry form through The Depository Trust Company and will be redeemed according to DTC procedures [3]. Contact Information - Investors seeking information about the redemption payment should contact the bank or their broker [4].

Core Viewpoint - Medallion Bank has successfully closed a public offering of 3,100,000 shares of its Series G Preferred Stock, raising an aggregate liquidation amount of $77.5 million, which includes a partial exercise of the underwriters' option [1][2] Group 1: Offering Details - The Series G Preferred Stock has a par value of $1.00 per share and a liquidation amount of $25 per share [1] - The offering was priced on May 15, 2025, and commenced trading on the Nasdaq Capital Market under the ticker symbol "MBNKO" on May 22, 2025 [2] - The offering was exempt from the registration requirements of the Securities Act of 1933 and was made only by means of an offering circular [5] Group 2: Use of Proceeds - Medallion Bank intends to use the net proceeds from the offering for general corporate purposes, which may include increasing capital levels, growing consumer loan portfolios, or redeeming outstanding Series F Preferred Stock, subject to regulatory approval [3] Group 3: Company Background - Medallion Bank specializes in providing consumer loans for recreational vehicles, boats, and home improvements, and offers loan origination services to fintech partners [7] - The bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City and is a wholly owned subsidiary of Medallion Financial Corp [7] Group 4: Management and Advisors - Piper Sandler & Co. and Lucid Capital Markets, LLC acted as joint book-running managers for the offering, with several other firms serving as lead managers [4]

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Medallion Financial Corp.'s unaudited consolidated financial statements for Q1 2025, prepared under SEC regulations and GAAP, are presented [Consolidated Balance Sheets](index=6&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Medallion Financial Corp. reported **total assets** of **$2.85 billion**, **total liabilities** of **$2.40 billion**, and **total equity** of **$449.0 million** as of March 31, 2025 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,847,738** | **$2,868,606** | | Net loans receivable | $2,261,334 | $2,265,428 | | Cash and cash equivalents | $131,512 | $98,238 | | **Total Liabilities** | **$2,398,726** | **$2,429,648** | | Deposits | $2,022,828 | $2,090,071 | | Long-term debt | $199,665 | $232,159 | | **Total Equity** | **$449,012** | **$438,958** | | Book value per common share | $16.36 | $16.00 | [Consolidated Statements of Operations](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported increased **net income** and **diluted earnings per share** for Q1 2025, driven by higher **net interest income** and **other income** Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total interest income | $75,425 | $67,070 | | Total interest expense | $24,013 | $19,153 | | **Net interest income** | **$51,412** | **$47,917** | | Provision for credit losses | $22,014 | $17,201 | | Total other income, net | $11,599 | $5,403 | | **Net income attributable to Medallion Financial Corp.** | **$12,014** | **$10,024** | | **Diluted earnings per share** | **$0.50** | **$0.42** | [Consolidated Statements of Cash Flows](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For Q1 2025, **net cash provided by operating activities** was **$36.3 million**, while **investing** and **financing activities** used cash, resulting in a **net decrease in cash** of **$11.6 million** Cash Flow Summary for Three Months Ended March 31 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,259 | $32,255 | | Net cash used for investing activities | ($4,695) | ($32,906) | | Net cash (used in) provided by financing activities | ($43,142) | $19,931 | | **Net (Decrease) Increase in Cash and Cash Equivalents** | **($11,578)** | **$19,280** | [Notes to Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) The notes detail the company's accounting policies, loan portfolio, debt structure, segment performance, fair value measurements, and legal contingencies, including an SEC settlement - The company's **primary operating subsidiary** is Medallion Bank, an FDIC-insured industrial bank that originates consumer loans for RVs, boats, and home improvements, funded primarily by brokered time certificates of deposit[35](index=35&type=chunk) - The company adopted the **CECL methodology** (ASC 326) for estimating credit losses, which requires recognition of lifetime expected losses based on historical performance and reasonable future forecasts[55](index=55&type=chunk) - In December **2024**, the company reached an **agreement in principle** with the SEC's Division of Enforcement to resolve litigation related to activities from **2015-2017** The settlement is subject to approval by SEC Commissioners and the court[159](index=159&type=chunk) - Subsequent to the quarter end, on April **30**, **2025**, the Bank sold **$52.8 million** in **Recreation loans held for sale**, receiving total proceeds of **$55.9 million**[195](index=195&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Medallion Financial Corp.'s Q1 2025 performance, highlighting net interest income growth, margin changes, credit loss provisions, and liquidity [Company Background](index=38&type=section&id=COMPANY%20BACKGROUND) Medallion Financial is a specialty finance company focused on consumer and commercial lending, primarily funded by deposits and debentures, with Medallion Bank as its main subsidiary - The company's **strategic focus** is on its consumer finance (recreation and home improvement loans) and commercial lending businesses[199](index=199&type=chunk) - The company is considering various **strategic alternatives** for Medallion Bank, which could include an IPO, sale, or spin-off, but no decision has been made[205](index=205&type=chunk) [Average Balances and Rates](index=40&type=section&id=AVERAGE%20BALANCES%20AND%20RATES) For Q1 2025, the **net interest margin** tightened to **7.94%** as the **average cost of interest-bearing liabilities** rose more significantly than the **yield on interest-earning assets** Net Interest Margin Analysis (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 11.65% | 11.34% | | Average Cost on Interest-Bearing Liabilities | 4.16% | 3.67% | | **Net Interest Margin, Gross** | **7.94%** | **8.10%** | - The increase in **interest expense** was primarily driven by higher borrowing costs for deposits, as older, lower-rate certificates mature and are replaced at current market rates[218](index=218&type=chunk) [Loans](index=42&type=section&id=LOANS) The **total gross loan portfolio** was **$2.49 billion** as of March 31, 2025, with Q1 2025 **loan originations** significantly increasing to **$281.6 million**, primarily due to the strategic partnership program Loan Originations by Segment - Q1 2025 (in thousands) | Segment | Q1 2025 Originations | | :--- | :--- | | Recreation | $86,833 | | Home Improvement | $48,796 | | Commercial | $9,707 | | Strategic Partnership | $136,240 | | **Total** | **$281,648** | [Provision and Allowance for Credit Losses](index=43&type=section&id=PROVISION%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) The **provision for credit losses** increased to **$22.0 million** in Q1 2025 due to rising loss rates and delinquencies, with the **total allowance** reaching **$100.4 million** - The increase in the **provision for credit losses** was driven by rising loss rates and economic uncertainty, particularly in the recreation loan portfolio[230](index=230&type=chunk) Allowance for Credit Losses Activity - Q1 2025 (in thousands) | Account | Amount | | :--- | :--- | | Balance at Dec 31, 2024 | $97,368 | | Charge-offs | ($24,646) | | Recoveries | $5,630 | | Provision for credit losses | $22,014 | | **Balance at Mar 31, 2025** | **$100,366** | [Segment Results](index=45&type=section&id=SEGMENT%20RESULTS) Recreation and Home Improvement segments drove **interest income**, Commercial lending contributed through **equity investment gains**, Taxi Medallion generated **net income** from recoveries, and Corporate includes the strategic partnership program [Recreation Lending](index=45&type=section&id=Recreation%20Lending) The **recreation lending segment** generated **net income** of **$8.0 million** in Q1 2025, despite decreased **originations** of **$86.8 million** and a high **provision for credit losses** of **$16.9 million** - Lower **origination volumes** of **$86.8 million** reflect restrictive underwriting standards and management's efforts to mitigate concentration risks[246](index=246&type=chunk) Recreation Lending Performance - Q1 2025 vs Q1 2024 (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net interest income | $38,425 | $34,282 | | Provision for credit losses | $16,870 | $17,030 | | **Net income after taxes** | **$8,014** | **$5,941** | [Home Improvement Lending](index=46&type=section&id=Home%20Improvement%20Lending) The **home improvement segment's net income** was **$3.3 million** in Q1 2025, down due to a higher **provision for credit losses**, with **originations** at **$48.8 million** reflecting restrictive underwriting - **Origination volumes** were slightly lower at **$48.8 million** due to ongoing restrictive underwriting standards and efforts to mitigate concentration risks[256](index=256&type=chunk) Home Improvement Lending Performance - Q1 2025 vs Q1 2024 (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net interest income | $12,807 | $11,813 | | Provision for credit losses | $2,845 | $898 | | **Net income after taxes** | **$3,328** | **$4,386** | [Commercial Lending](index=48&type=section&id=Commercial%20Lending) The **commercial lending segment** reported **net income** of **$4.9 million** in Q1 2025, driven by **$9.4 million** in **net gains on equity investments**, offsetting a **$3.1 million provision for credit losses** - The segment recognized **net gains** of **$9.4 million** from its equity investments during Q1 2025, a significant driver of its profitability[262](index=262&type=chunk) Commercial Lending Performance - Q1 2025 vs Q1 2024 (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net interest income | $2,290 | $2,547 | | Provision for credit losses | $3,114 | $216 | | Gains on equity investments, net | $9,430 | $4,167 | | **Net income after taxes** | **$4,909** | **$3,577** | [Taxi Medallion Lending](index=49&type=section&id=Taxi%20Medallion%20Lending) The **taxi medallion segment** reported **net income** of **$0.5 million** in Q1 2025, with **$1.7 million** in **net recoveries and gains** from asset collections, maintaining a **conservative valuation** for medallions - The company collected **$2.6 million** from taxi medallion assets, leading to **$1.7 million** in **net recoveries and gains** for the quarter[268](index=268&type=chunk) - A **conservative valuation** of **$79,500** per medallion continues to be used for the New York City and Newark markets, despite fluctuating higher transfer prices[267](index=267&type=chunk) [Consolidated Results of Operations](index=51&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) **Net income attributable to shareholders** for Q1 2025 increased to **$12.0 million** (**$0.50/share**), driven by higher **net interest income** and **other income**, partially offset by increased **provision for credit losses** and **operating expenses** Q1 2025 vs Q1 2024 Summary (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $51.4 | $47.9 | | Provision for Credit Losses | $22.0 | $17.2 | | Net Other Income | $11.6 | $5.4 | | Operating Expenses | $20.8 | $18.2 | | **Net Income (to shareholders)** | **$12.0** | **$10.0** | [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity through diverse sources, with **total outstanding debt** of **$2.34 billion** as of March 31, 2025, including a new **SBA debenture commitment** and a **Federal Reserve discount window line of credit** - **Primary sources of liquidity** include brokered certificates of deposit, SBA debentures, private debt placements, and loan amortization[300](index=300&type=chunk) - In February **2024**, Medallion Capital secured a new **$18.5 million debenture financing commitment** from the SBA[303](index=303&type=chunk) Debt Composition as of March 31, 2025 (in thousands) | Debt Type | Balance | Percentage | Weighted Avg. Rate | | :--- | :--- | :--- | :--- | | Deposits | $2,023,124 | 87% | 3.75% | | Privately placed notes | $146,500 | 6% | 8.12% | | SBA debentures and borrowings | $70,500 | 3% | 3.84% | | Federal reserve and other borrowings | $65,000 | 3% | 4.50% | | Trust preferred securities | $33,000 | 1% | 6.69% | | **Total** | **$2,338,124** | **100%** | **4.09%** | [Dividends and Stock Repurchases](index=57&type=section&id=Dividends%20and%20Stock%20Repurchases) The board increased the **quarterly dividend** to **$0.12 per share**, and the company repurchased **60,185 shares** for **$0.5 million** in Q1 2025, with **$14.9 million** remaining for repurchases - The **quarterly dividend** was increased to **$0.12 per share**, effective for the dividend payable on May **30**, **2025**[322](index=322&type=chunk) - In Q1 **2025**, the company repurchased **60,185 shares** for **$0.5 million**, with **$14.9 million** remaining under the **repurchase program**[323](index=323&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company states no material changes occurred in its quantitative and qualitative market risk disclosures since the 2024 Annual Report on Form 10-K - There has been no material change in disclosure regarding market risk since the Annual Report on Form **10-K** for the year ended December **31**, **2024**[324](index=324&type=chunk) [Controls and Procedures](index=57&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls during the quarter - The CEO and CFO concluded that **disclosure controls and procedures** were effective as of March **31**, **2025**[325](index=325&type=chunk) - No changes in **internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[326](index=326&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company refers to Note 10 of the financial statements for details on legal proceedings, including a pending SEC litigation settlement - Details of the Company's **legal proceedings** are provided in Note **10**, subsections (c) and (d), of the consolidated financial statements[328](index=328&type=chunk) [Risk Factors](index=58&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company reports no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes in **risk factors** from those disclosed in the Annual Report on Form **10-K** for the fiscal year ended December **31**, **2024**[329](index=329&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the company's Q1 2025 stock repurchase activity, including shares bought and remaining authorization Stock Repurchase Activity for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Total Amount Paid (in thousands) | | :--- | :--- | :--- | :--- | | Jan 1 - Jan 31 | — | $— | $— | | Feb 1 - Feb 28 | — | $— | $— | | Mar 1 - Mar 31 | 60,185 | $8.83 | $531 | | **Total** | **60,185** | **$8.83** | **$531** | - As of March **31**, **2025**, approximately **$14.9 million** remained available for repurchase under the company's **stock repurchase program**[330](index=330&type=chunk) [Other Information](index=58&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reports no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - No director or officer adopted, modified, or terminated a **Rule 10b5-1 trading arrangement** or **non-Rule 10b5-1 trading arrangement** during the fiscal quarter ended March **31**, **2025**[332](index=332&type=chunk) [Exhibits](index=59&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, which include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act (Sections 302 and 906) and the Inline XBRL data files - Exhibits filed include **certifications from the CEO and CFO** as required by Sarbanes-Oxley Sections **302** and **906**[334](index=334&type=chunk) - The filing includes **Inline XBRL documents** for interactive data[334](index=334&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) [Q1 2025 Performance Summary](index=1&type=section&id=Q1%202025%20Performance%20Summary) Medallion Financial reported strong Q1 2025 results, with net income increasing 20% to $12.0 million, driven by higher net interest income and loan originations Q1 2025 Key Financial Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $12.0 million | $10.0 million | +20% | | Diluted EPS | $0.50 | $0.42 | +19% | | Net Interest Income | $51.4 million | $47.9 million | +7% | | Loan Originations | $281.6 million | $173.1 million | +63% | | Total Loans | $2.5 billion | $2.2 billion | +12% | | Provision for Credit Losses | $22.0 million | $17.2 million | +28% | - The company has successfully transitioned from its legacy taxi medallion lending business, with strong performance from its consumer lending and commercial division, Medallion Capital[3](index=3&type=chunk) - Strategic partnership loan volume was a key growth driver, increasing to **$136 million** in Q1 2025 from just **$16 million** in Q1 2024[4](index=4&type=chunk) - Delinquencies in both consumer loan portfolios (Recreation and Home Improvement) improved compared to the previous quarter[4](index=4&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) Recreation and Home Improvement loan portfolios grew, while the taxi medallion segment continued its planned reduction, now under 0.5% of total assets Recreation Lending Segment (Q1 2025) | Metric | Value | YoY Comparison | | :--- | :--- | :--- | | Originations | $86.8 million | vs. $105.8 million | | Total Loans | $1.5 billion | +13% | | Interest Income | $50.5 million | +15% | | Average Interest Rate | 15.01% | vs. 14.80% | | 90+ Days Past Due | 0.48% of gross loans | Unchanged | Home Improvement Lending Segment (Q1 2025) | Metric | Value | YoY Comparison | | :--- | :--- | :--- | | Originations | $48.8 million | vs. $51.6 million | | Total Loans | $812.4 million | +8% | | Interest Income | $19.8 million | +13% | | Average Interest Rate | 9.83% | vs. 9.60% | | 90+ Days Past Due | 0.19% of gross loans | vs. 0.18% | - Commercial loans increased to **$116.1 million** from **$106.6 million** a year ago, with an average interest rate of **13.14%**[10](index=10&type=chunk) - The taxi medallion business continues to be wound down, with net assets declining **37%** YoY to **$6.8 million**, representing less than **0.5%** of the Company's total assets[10](index=10&type=chunk) [Capital Allocation](index=2&type=section&id=Capital%20Allocation) The company demonstrated commitment to shareholder returns by increasing its quarterly dividend and repurchasing common stock - The Board of Directors increased the quarterly cash dividend to **$0.12 per share**, payable on May 30, 2025[5](index=5&type=chunk)[8](index=8&type=chunk) - In Q1 2025, the Company repurchased **60,185 shares** of common stock for **$0.5 million**, at an average price of **$8.83 per share**[10](index=10&type=chunk) - As of March 31, 2025, **$14.9 million** remained available under the company's **$40 million** stock repurchase program[10](index=10&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $2.85 billion, with net loans receivable and total equity increasing year-over-year Balance Sheet Highlights | Account | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | March 31, 2024 ($ thousands) | | :--- | :--- | :--- | :--- | | Total Assets | $2,847,738 | $2,868,606 | $2,602,388 | | Net Loans Receivable | $2,261,334 | $2,265,428 | $2,144,599 | | Total Liabilities | $2,398,726 | $2,429,648 | $2,200,938 | | Total Equity | $449,012 | $438,958 | $417,824 | | Book Value Per Share | $16.36 | $16.00 | $14.93 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2025, net interest income grew 7% YoY to $51.4 million, and net income rose 20% to $12.0 million, boosted by other income Statement of Operations Highlights | Account | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | | :--- | :--- | :--- | | Net Interest Income | $51,412 | $47,917 | | Provision for Credit Losses | $22,014 | $17,201 | | Total Other Income, net | $11,599 | $5,403 | | Total Other Expenses | $20,758 | $18,225 | | Net Income Attributable to MFIN | $12,014 | $10,024 | | Diluted Net Income Per Share | $0.50 | $0.42 | [Corporate Information](index=3&type=section&id=Corporate%20Information) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) The company will host a conference call and webcast on May 1, 2025, at 9:00 a.m. ET to discuss Q1 financial results Conference Call Details | Item | Detail | | :--- | :--- | | Date | Thursday, May 1, 2025 | | Time | 9:00 a.m. Eastern time | | U.S. Dial-in | (833) 816-1412 | | International Dial-in | (412) 317-0504 | | Webcast | Link available on company's IR website |

Core Viewpoint - Medallion Bank reported strong performance in Q1 2025, with net income of $15.6 million, an 8% increase from the previous year, despite economic uncertainties affecting demand in recreation and home improvement lending [3]. Financial Performance - Net income for Q1 2025 was $15.6 million, compared to $14.5 million in Q1 2024 [5]. - Net interest income increased to $52.2 million from $48.2 million year-over-year [5]. - The net interest margin slightly decreased to 8.35% from 8.59% in the prior year [5]. - Total provision for credit losses rose to $19.0 million from $17.0 million in the previous year [5]. - Annualized net charge-offs were 3.41% of average loans outstanding, up from 3.38% in the prior year [5]. - Total loan portfolio grew by 6% to $2.2 billion as of March 31, 2025 [5]. - Total assets were reported at $2.5 billion with a Tier 1 leverage ratio of 16.0% [5]. Lending Segments - The recreation loan portfolio grew by 5% to $1.432 billion, while loan originations decreased to $86.8 million from $105.8 million year-over-year [6]. - Delinquencies for recreation loans increased to $68.2 million (4.76%) from $55.5 million (4.06%) in the prior year [6]. - The home improvement loan portfolio grew by 8% to $812.4 million, with loan originations at $48.8 million, down from $51.6 million [6]. - Delinquencies for home improvement loans rose to $8.3 million (1.02%) from $6.5 million (0.87%) year-over-year [6]. Strategic Initiatives - The bank completed an initial sale of $53 million in recreation loans at a premium to par value, indicating a proactive approach to managing its loan portfolio [3]. - The bank continues to monitor the market for potential loan sale opportunities [3]. Preferred Stock Dividend - The Board of Directors declared a quarterly cash dividend of $0.67982 per share on Series F Preferred Stock, with a dividend rate of 10.75761%, payable on July 1, 2025 [7].

PART I [Our Business](index=5&type=section&id=ITEM%201.%20OUR%20BUSINESS) Medallion Financial Corp. is a specialty finance company with total assets of **$2.9 billion** as of December 31, 2024, focusing on consumer and commercial lending through diversified segments and strategic partnerships - The company's strategic focus is on growing its consumer finance and commercial lending businesses, with total assets reaching **$2.9 billion** at the end of 2024, up from **$2.6 billion** in 2023[11](index=11&type=chunk) Net Loans Receivable by Segment (December 31, 2024) | Loan Segment | Net Loans (in thousands) | Percentage of Total | | :--- | :--- | :--- | | Recreation | $1,351,301 | 56.4% | | Home improvement | $806,675 | 33.7% | | Commercial | $106,083 | 4.4% | | Taxi medallion | $1,369 | 0.1% | | **Total Loans Held for Investment** | **$2,265,428** | **94.6%** | | Loans Held for Sale | $128,226 | 5.4% | | **Total Net Loans** | **$2,393,654** | **100.0%** | [Lending Segments](index=6&type=section&id=Lending%20Segments) The company's lending activities are diversified across recreation, home improvement, and commercial segments, with recreation being the largest and a growing fintech partnership program - Recreation lending is the company's most significant segment, accounting for **57%** of loans receivable and **67%** of interest income for the year ended December 31, 2024[15](index=15&type=chunk) - Home improvement loans, offered through contractors and FSPs, comprised **33%** of the company's loans receivable as of December 31, 2024[18](index=18&type=chunk) - The strategic partnership program with fintech companies originated **$203.6 million** in loans in 2024, a significant increase from **$118.3 million** in 2023[25](index=25&type=chunk) [Our Strategy](index=8&type=section&id=Our%20Strategy) The company's core strategy focuses on dominating profitable niche markets by leveraging relationships, disciplined underwriting, experienced management, and expanding fintech partnerships - A key strategy is to capitalize on relationships with dealers, contractors, and Financial Service Providers (FSPs), which generated all consumer loans retained in the portfolio in 2024[28](index=28&type=chunk) - The company emphasizes disciplined underwriting and rigorous portfolio monitoring, imposing more restrictive standards to mitigate concentration risks[30](index=30&type=chunk) - Expansion of the strategic partnership program is a core growth driver, with two new partnerships launched in 2024 and others being evaluated[32](index=32&type=chunk) [Sources of Funds](index=10&type=section&id=Sources%20of%20Funds) Operations are primarily funded by brokered certificates of deposit, supplemented by privately placed notes and SBA debentures, with a strategy to optimize debt structure Sources of Funds (December 31, 2024) | Source | Amount (in thousands) | Avg. Interest Rate | | :--- | :--- | :--- | | Cash, cash equivalents, and federal funds sold | $169,572 | N/A | | Brokered certificates of deposit & other funds | $2,094,663 | 3.71% | | Privately placed notes | $146,500 | 8.12% | | SBA debentures and borrowings | $70,250 | 3.53% | | Trust preferred securities | $33,000 | 6.83% | | Federal reserve and other borrowings | $35,000 | 4.50% | | **Total Debt Outstanding** | **$2,379,413** | N/A | [Human Capital Resources](index=11&type=section&id=Human%20Capital%20Resources) As of December 31, 2024, the company employed 174 people, primarily at Medallion Bank, emphasizing equal opportunity and comprehensive employee incentives - Total employees increased to **174** at year-end 2024 from **169** at year-end 2023, with the majority (**135**) employed at Medallion Bank[45](index=45&type=chunk) [Supervision and Regulation](index=11&type=section&id=SUPERVISION%20AND%20REGULATION) The company operates in a highly regulated environment, with Medallion Bank subject to extensive federal and state banking laws, and SBIC subsidiaries regulated by the SBA - Medallion Bank is subject to extensive regulation by the FDIC and the Utah Department of Financial Institutions, intended primarily for the protection of depositors[51](index=51&type=chunk)[52](index=52&type=chunk) - As a condition of its FDIC insurance, Medallion Bank must maintain a **15%** Tier 1 leverage ratio, which it met as of year-end 2024[63](index=63&type=chunk) - The company's subsidiaries, Medallion Funding and Medallion Capital, are licensed and regulated by the Small Business Administration (SBA) as Small Business Investment Companies (SBICs)[90](index=90&type=chunk) [Risk Factors](index=23&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from its concentrated consumer lending portfolio, funding dependence on brokered deposits, pending SEC litigation, and intense market competition [Risks Related to Our Loan Portfolios and Business](index=23&type=section&id=Risks%20Related%20to%20Our%20Loan%20Portfolios%20and%20Business) The business is highly susceptible to economic downturns due to its concentrated consumer lending, particularly in non-prime recreation loans, and relies on limited third-party relationships for originations - The business is heavily concentrated in consumer lending, making it highly sensitive to macroeconomic conditions like recession risk, inflation, and interest rate changes that impact consumer spending[107](index=107&type=chunk)[108](index=108&type=chunk) - As of December 31, 2024, **37%** of recreation loans originated were non-prime, which are expected to have higher default rates than prime loans[115](index=115&type=chunk) - The company's ability to originate loans depends on relationships with a limited number of dealers and FSPs; in 2024, the top ten relationships accounted for **48%** of home improvement and **38%** of recreation loan originations[122](index=122&type=chunk) [Financing and Related Risks](index=27&type=section&id=Financing%20and%20Related%20Risks) Key financial risks include debt covenant compliance, the critical reliance on brokered deposits for Medallion Bank's funding, and the holding company's dependence on subsidiary dividends - Medallion Bank relies heavily on brokered deposits for funding, and its ability to accept them is contingent on maintaining a "well-capitalized" status under FDIC regulations; loss of this status would materially impair its funding capabilities[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - As a holding company, it depends on dividends from subsidiaries to fund its operations and debt payments; in 2024, it received **$24.0 million** in dividends from Medallion Bank and **$1.6 million** from Medallion Capital[136](index=136&type=chunk) [Legal and Regulatory Risks](index=28&type=section&id=Legal%20and%20Regulatory%20Risks) Significant legal and regulatory risks include pending SEC litigation, the highly regulated banking environment, and compliance with various financial protection and anti-money laundering laws - The company faces pending litigation with the SEC regarding alleged violations from 2015-2017; an agreement in principle to settle was reached in December 2024, but it remains subject to approval by SEC Commissioners and the court[137](index=137&type=chunk)[138](index=138&type=chunk) - The banking industry is highly regulated, and failure to comply with laws from the FDIC and Utah DFI could result in sanctions, civil money penalties, or reputational damage[144](index=144&type=chunk) - The company's SBIC subsidiaries are subject to SBA regulations, and non-compliance could lead to penalties, including loss of access to SBA debentures[153](index=153&type=chunk)[154](index=154&type=chunk) [Risk Relating to Our Growth and Operations](index=34&type=section&id=Risk%20Relating%20to%20Our%20Growth%20and%20Operations) Growth and operations face risks from intense market competition, new uncertainties from strategic partnerships, cybersecurity threats, and reliance on key senior management and third-party vendors - The consumer lending market is highly competitive, with rivals including banks, credit unions, and finance companies that may have greater resources or less restrictive regulations[158](index=158&type=chunk) - The Strategic Partnership Program with fintech companies exposes the company to new and potentially uncertain legal and regulatory risks, including "true lender" challenges[159](index=159&type=chunk) - The business is vulnerable to security breaches and cyber-attacks, which could compromise sensitive data and lead to liability, regulatory penalties, and reputational damage[166](index=166&type=chunk) [Unresolved Staff Comments](index=43&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports that there are no unresolved staff comments - None[198](index=198&type=chunk) [Cybersecurity](index=43&type=section&id=ITEM%201C.%20CYBERSECURITY) Cybersecurity risks are managed through an enterprise risk management program, overseen by the Audit Committee, with subsidiary programs guided by the NIST framework - Cybersecurity risk is managed as part of the enterprise risk management program, overseen by the Audit Committee, which receives quarterly reports from the Information Security Director[199](index=199&type=chunk)[202](index=202&type=chunk) - The company's cybersecurity programs are guided by the National Institute of Standards and Technology (NIST) Cybersecurity Framework and include safeguards like employee training, incident response programs, and third-party risk management[200](index=200&type=chunk) [Properties](index=45&type=section&id=ITEM%202.%20PROPERTIES) The company leases all its primary office spaces in New York City, Salt Lake City, and Excelsior, Minnesota, owning no real property other than foreclosed assets - The company leases all its primary office spaces, with key locations in New York, NY; Salt Lake City, UT; and Excelsior, MN[205](index=205&type=chunk) [Legal Proceedings](index=45&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company refers to Note 10 of its consolidated financial statements for details regarding legal proceedings, including the pending SEC litigation - Details of legal proceedings, including the pending SEC litigation, are provided in Note 10 to the consolidated financial statements[206](index=206&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[207](index=207&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=46&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on NASDAQ, paid increased quarterly dividends in 2024, and repurchased shares under its authorized program - The company reinstated its quarterly dividend in March 2022 and increased it from **$0.10** to **$0.11** per share in October 2024[210](index=210&type=chunk) - During FY2024, the company repurchased **570,404** shares of its common stock at an aggregate cost of **$4.6 million**; as of year-end, **$15.4 million** remained available under the repurchase authorization[212](index=212&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In FY2024, total assets grew to **$2.9 billion**, but net income declined to **$35.9 million** due to higher credit loss provisions and increased interest expenses, compressing the net interest margin Key Financial Highlights (FY2024 vs. FY2023) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Assets | $2.9 billion | $2.6 billion | | Net Income (attributable) | $35.9 million | $55.1 million | | Diluted EPS | $1.52 | $2.37 | | Net Interest Income | $202.5 million | $188.1 million | | Provision for Credit Losses | $76.5 million | $37.8 million | | Net Interest Margin (gross) | 8.05% | 8.38% | - The increase in the allowance for credit losses to **$97.4 million** was primarily driven by rising loss rates and elevated delinquencies in the recreation loan portfolio[226](index=226&type=chunk)[250](index=250&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Critical accounting estimates involve significant judgment for the allowance for credit losses and goodwill valuation, both assessed using historical data, economic factors, and expert analysis - The allowance for credit losses is a critical estimate, based on historical data, economic conditions, and qualitative factors; a **50** basis point change in the qualitative loss factor would change the recreation and home improvement reserves by **$7.1 million** and **$4.1 million**, respectively[224](index=224&type=chunk)[225](index=225&type=chunk) - Goodwill of **$150.8 million** was assessed for impairment at year-end 2024 by a third-party expert using a discounted cash flow analysis (**50%** weight) and market approaches (**50%** weight); the assessment concluded that the fair value of the lending segments exceeded their carrying value[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) [Loans](index=54&type=section&id=LOANS) The total gross loan portfolio grew to **$2.49 billion** in 2024, driven by **$1.04 billion** in new originations primarily in recreation and home improvement segments, consisting mostly of fixed-rate loans Loan Portfolio Activity (Year Ended Dec 31, 2024) | (in thousands) | Recreation | Home Improvement | Commercial | Strategic Partnership | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Loans (Start) | $1,336,226 | $760,617 | $114,827 | $553 | $2,215,886 | | Loan Originations | $526,634 | $298,642 | $14,300 | $203,627 | $1,043,453 | | Gross Loans (End) | $1,543,243 | $827,211 | $111,273 | $7,386 | $2,491,022 | [Allowance for Credit Losses](index=55&type=section&id=ALLOWANCE%20FOR%20CREDIT%20LOSSES) The allowance for credit losses increased to **$97.4 million** at year-end 2024, driven by a **$76.5 million** provision and higher expected losses, particularly in the recreation loan portfolio Allowance for Credit Losses Activity (Year Ended Dec 31, 2024) | (in thousands) | Recreation | Home Improvement | Commercial | Taxi Medallion | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at Dec 31, 2023 | $57,532 | $21,019 | $4,148 | $1,536 | $84,235 | | Provision (Benefit) | $67,995 | $13,458 | $1,084 | ($6,035) | $76,502 | | Net Charge-offs | ($54,425) | ($13,941) | ($42) | ($5,039) | ($63,369) | | Balance at Dec 31, 2024 | $71,102 | $20,536 | $5,190 | $540 | $97,368 | - Loans **90** days or more past due increased to **$27.7 million** (**1.1%** of total loans) at the end of 2024, up from **$16.8 million** (**0.8%** of total loans) at the end of 2023[255](index=255&type=chunk) [Segment Results](index=57&type=section&id=SEGMENT%20RESULTS) In 2024, Recreation Lending remained the primary earnings driver despite a higher credit loss provision, while Home Improvement and Commercial Lending segments saw increased net income Net Income by Segment (FY2024 vs. FY2023) | Segment (in thousands) | Net Income 2024 | Net Income 2023 | | :--- | :--- | :--- | | Recreation Lending | $32,460 | $42,281 | | Home Improvement Lending | $12,759 | $7,273 | | Commercial Lending | $7,827 | $6,791 | | Taxi Medallion Lending | $1,996 | $17,011 | | Corporate and Other Investments | ($13,117) | ($12,230) | [Consolidated Results of Operations](index=63&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Net income attributable to shareholders decreased to **$35.9 million** in FY2024, primarily due to a doubling of the provision for credit losses and a **40%** increase in interest expense Consolidated Statement of Operations Summary | (in millions) | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Interest Income | $202.5 | $188.1 | | Provision for Credit Losses | $76.5 | $37.8 | | Net Interest Income after Provision | $126.0 | $150.3 | | Total Other Income, net | $11.3 | $11.3 | | Total Other Expenses | $74.4 | $75.6 | | Net Income (attributable) | $35.9 | $55.1 | [Asset/Liability Management](index=64&type=section&id=ASSET%2FLIABILITY%20MANAGEMENT) The company manages interest rate risk from fixed-rate assets and variable-rate liabilities, with a negative **$0.6 billion** one-year interest rate gap, and actively manages capital through debt issuances - The one-year cumulative interest rate sensitivity gap was negative **$0.6 billion**, or **22%** of interest rate sensitive assets, as of December 31, 2024[313](index=313&type=chunk) - A hypothetical immediate **1%** increase in interest rates would increase net income by **$2.2 million** on an annualized basis as of December 31, 2024[333](index=333&type=chunk) - The company actively manages its capital resources, completing a **$5.0 million** private placement in August 2024 and amending notes in June 2024 to increase principal and extend maturity[316](index=316&type=chunk)[317](index=317&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are interest rate fluctuations and portfolio valuations, with a hypothetical **1%** rate increase estimated to increase net income by **$2.2 million** annually - The principal market risks are fluctuations in interest rates and portfolio valuations[343](index=343&type=chunk) - A hypothetical immediate **1%** increase in interest rates would result in an estimated increase to net income of **$2.2 million** on an annualized basis as of December 31, 2024[344](index=344&type=chunk) [Financial Statements and Supplementary Data](index=70&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section incorporates by reference the company's audited consolidated financial statements and accompanying notes for the fiscal year ended December 31, 2024 - This section contains the audited consolidated financial statements and supplementary data for Medallion Financial Corp. for the fiscal year ended December 31, 2024[345](index=345&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[346](index=346&type=chunk) [Controls and Procedures](index=70&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management and independent auditors concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[347](index=347&type=chunk) - Management assessed internal control over financial reporting as effective as of December 31, 2024, based on the COSO framework[351](index=351&type=chunk) - The independent auditor, Plante & Moran, PLLC, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[357](index=357&type=chunk) [Other Information](index=73&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) No director or officer trading plans under Rule 10b5-1 were adopted, modified, or terminated during the fourth quarter of 2024 - No director or officer trading plans under Rule 10b5-1 were adopted, modified, or terminated during the fourth quarter of 2024[364](index=364&type=chunk) PART III [Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=73&type=section&id=ITEM%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for Items 10 through 14 is incorporated by reference from the company's forthcoming 2025 Definitive Proxy Statement - Information required for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's forthcoming 2025 Definitive Proxy Statement[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=74&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements, schedules, and various exhibits filed as part of the Form 10-K, including corporate documents and certifications - This section contains the index to financial statements and a list of all exhibits filed with the 10-K report[369](index=369&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) [Executive Commentary](index=1&type=section&id=Executive%20Commentary) Medallion's President highlights record annual loan originations over $1 billion and strong year-end financial performance - For the first time in company history, annual loan originations exceeded **$1 billion**, with over half being high-yielding recreation loans[5](index=5&type=chunk) - The commercial lending group, Medallion Capital, generated net gains of **$3.8 million** in Q4 and **$6.9 million** for the full year from exiting a portfolio investment[6](index=6&type=chunk) - An agreement in principle was reached regarding the SEC matter, resulting in a **$3.0 million** charge for the settlement and a **$5.5 million** benefit from insurance coverage for legal costs[7](index=7&type=chunk) - The company achieved record year-end figures for total interest income, net interest income, assets, strategic partnership loan volume, and total equity[8](index=8&type=chunk) [2024 Fourth Quarter Highlights](index=1&type=section&id=2024%20Fourth%20Quarter%20Highlights) Q4 2024 net income decreased to $10.1 million due to lower taxi medallion recoveries, despite net interest income growth Q4 2024 vs Q4 2023 Financial Performance (in millions) | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $10.1M | $14.3M | -29.4% | | Diluted EPS | $0.43 | $0.60 | -28.3% | | Net Interest Income | $52.0M | $49.0M | +6.1% | | Loan Originations | $285.7M | $169.1M | +69.0% | | Credit Loss Provision | $20.6M | $10.8M | +90.8% | | Taxi Medallion Recoveries | $1.3M | $12.5M | -89.6% | - The Board of Directors approved a **10% increase** in the quarterly dividend to **$0.11 per share**[8](index=8&type=chunk) [2024 Full-Year Highlights](index=1&type=section&id=2024%20Full-Year%20Highlights) Full-year 2024 net income decreased to $35.9 million due to lower taxi medallion recoveries, despite record net interest income Full-Year 2024 vs 2023 Financial Performance (in millions/billions) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $35.9M | $55.1M | -34.8% | | Diluted EPS | $1.52 | $2.37 | -35.9% | | Net Interest Income | $202.5M | $188.1M | +7.7% | | Loan Originations | $1.0B | $960.0M | +4.2% | | Credit Loss Provision | $76.5M | $37.8M | +102.4% | | Total Assets | $2.9B | $2.6B (Dec 31, 2023) | +11% | - The company repurchased **570,404 shares** of common stock for a total of **$4.6 million** during the year[8](index=8&type=chunk) [Business Segment & Capital Allocation](index=3&type=section&id=Business%20Segment%20%26%20Capital%20Allocation) [Business Segment Highlights](index=3&type=section&id=Business%20Segment%20Highlights) Recreation and Home Improvement lending segments show strong portfolio growth, while the Taxi Medallion segment significantly reduced [Recreation Lending Segment](index=3&type=section&id=Recreation%20Lending%20Segment) Recreation Lending reported strong Q4 originations, 15% portfolio growth to $1.5 billion, and stable asset quality Recreation Lending Segment Q4 2024 Metrics (in millions/billions) | Metric | Q4 2024 | YoY Change | | :--- | :--- | :--- | | Originations | $72.2M | +15.2% | | Total Portfolio | $1.5B | +15.0% | | Average Interest Rate | 15.07% | +28 bps | | 90+ Days Past Due | 0.67% | -3 bps | - In December 2024, the company signed a letter of intent to sell up to **$121 million** of recreation loans at a premium to par value[13](index=13&type=chunk) [Home Improvement Lending Segment](index=3&type=section&id=Home%20Improvement%20Lending%20Segment) Home Improvement Lending saw Q4 originations of $82.5 million, 9% portfolio growth to $827.2 million, and improved credit quality Home Improvement Lending Segment Q4 2024 Metrics (in millions) | Metric | Q4 2024 | YoY Change | | :--- | :--- | :--- | | Originations | $82.5M | +25.0% | | Total Portfolio | $827.2M | +8.8% | | Average Interest Rate | 9.81% | +30 bps | | 90+ Days Past Due | 0.17% | -3 bps | [Commercial Lending Segment](index=3&type=section&id=Commercial%20Lending%20Segment) Commercial Lending portfolio remained stable at $111.3 million with a slight increase in average interest rate to 12.97% - Commercial loans totaled **$111.3 million** at year-end 2024, with an average interest rate of **12.97%**[13](index=13&type=chunk) [Taxi Medallion Lending Segment](index=3&type=section&id=Taxi%20Medallion%20Lending%20Segment) The Taxi Medallion portfolio continues to wind down, with net assets reduced by 37% to $7.7 million - Collected **$2.6 million** of cash on taxi medallion-related assets during Q4 2024[13](index=13&type=chunk) - Total net taxi medallion assets were reduced by **37%** year-over-year to **$7.7 million**, representing less than **0.5%** of total company assets[13](index=13&type=chunk) [Capital Allocation](index=3&type=section&id=Capital%20Allocation) Medallion Financial actively returns capital to shareholders through increased dividends and a $4.6 million stock repurchase program [Quarterly Dividend](index=3&type=section&id=Quarterly%20Dividend) The Board declared a quarterly cash dividend of $0.11 per share, a 10% increase, payable on March 31, 2025 - The Board declared a quarterly dividend of **$0.11 per share**, payable on March 31, 2025[11](index=11&type=chunk) [Stock Repurchase Plan](index=3&type=section&id=Stock%20Repurchase%20Plan) In 2024, the company repurchased 570,404 shares for $4.6 million, with $15.4 million remaining under the program - In 2024, the Company purchased **570,404 shares** for **$4.6 million**, with **$15.4 million** remaining under the repurchase program[12](index=12&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased 11% to $2.87 billion, driven by loan growth and funded by a 12% rise in deposits, with total equity also increasing Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $2,868,606 | $2,587,827 | +10.8% | | Net Loans Receivable | $2,265,428 | $2,131,651 | +6.3% | | Total Liabilities | $2,429,648 | $2,176,053 | +11.7% | | Deposits | $2,090,071 | $1,866,657 | +11.9% | | Total Equity | $438,958 | $411,774 | +6.6% | | Book Value Per Share | $16.00 | $14.63 | +9.4% | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Full-year 2024 net interest income grew 8% to $202.5 million, but net income declined to $35.9 million due to higher credit loss provisions Consolidated Statement of Operations Highlights (in thousands) | Account | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $202,535 | $188,094 | +7.7% | | Provision for Credit Losses | $76,502 | $37,810 | +102.3% | | Total Other Income, net | $11,330 | $11,320 | +0.1% | | Total Other Expenses | $74,427 | $75,568 | -1.5% | | Net Income Attributable to MFIN | $35,878 | $55,079 | -34.9% | | Diluted EPS | $1.52 | $2.37 | -35.9% | [Conference Call & Company Information](index=4&type=section&id=Conference%20Call%20%26%20Company%20Information) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) The company will host a conference call on March 5, 2025, at 9:00 a.m. ET to discuss Q4 and full-year 2024 results Earnings Call Details | Item | Detail | | :--- | :--- | | Date | Wednesday, March 5, 2025 | | Time | 9:00 a.m. Eastern time | | U.S. Dial-in | (833) 816-1412 | | International Dial-in | (412) 317-0504 | [About Medallion Financial Corp.](index=4&type=section&id=About%20Medallion%20Financial%20Corp.) Medallion Financial Corp. is a specialty finance company focusing on consumer and mezzanine loans in recreation and home improvement - Medallion Financial Corp. originates and services consumer and mezzanine loans, with a focus on the recreation and home improvement industries[17](index=17&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements subject to risks and uncertainties, including the pending SEC litigation settlement approval - The press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ significantly. The settlement of the pending SEC litigation remains subject to SEC and court approval[18](index=18&type=chunk)