PART I – FINANCIAL INFORMATION Financial Statements Medallion Financial Corp.'s unaudited consolidated financial statements for Q1 2025, prepared under SEC regulations and GAAP, are presented Consolidated Balance Sheets 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 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 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 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 deposit35 - 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 forecasts55 - 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 court159 - 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 million195 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Medallion Financial Corp.'s Q1 2025 performance, highlighting net interest income growth, margin changes, credit loss provisions, and liquidity Company Background 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 businesses199 - The company is considering various strategic alternatives for Medallion Bank, which could include an IPO, sale, or spin-off, but no decision has been made205 Average Balances and Rates 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 rates218 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 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 portfolio230 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 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 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 risks246 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 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 risks256 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 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 profitability262 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 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 quarter268 - A conservative valuation of $79,500 per medallion continues to be used for the New York City and Newark markets, despite fluctuating higher transfer prices267 Consolidated Results of Operations 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 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 amortization300 - In February 2024, Medallion Capital secured a new $18.5 million debenture financing commitment from the SBA303 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 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, 2025322 - In Q1 2025, the company repurchased 60,185 shares for $0.5 million, with $14.9 million remaining under the repurchase program323 Quantitative and Qualitative Disclosures About Market Risk 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, 2024324 Controls and Procedures 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, 2025325 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls326 PART II—OTHER INFORMATION Legal Proceedings 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 statements328 Risk Factors 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, 2024329 Unregistered Sales of Equity Securities and Use of Proceeds 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 program330 Other Information 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, 2025332 Exhibits 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 906334 - The filing includes Inline XBRL documents for interactive data334
MEDALLION BANK F(MBNKP) - 2025 Q1 - Quarterly Report