Financial Performance - Net interest income for the three months ended June 30, 2025, was $53.37 million, compared to $49.87 million for the same period in 2024, reflecting a growth of approximately 5.0%[218] - Net interest income for the six months ended June 30, 2025, was $104,782 thousand, compared to $97,785 thousand for the same period in 2024[221] - The net interest margin, gross, was 8.78% for the three months ended June 30, 2025, down from 9.18% in 2024[275] - The total interest income for the six months ended June 30, 2025, was $101.6 million, up 11.8% from $91.4 million in 2024[260] - The total interest income rose to $77.4 million and $152.9 million for the three and six months ended June 30, 2025, up from $70.7 million and $137.8 million in 2024, reflecting a growth of 9.5% and 10.9%[293] - Net income after taxes for the three months ended June 30, 2025, was $9.9 million, an increase of 48% from $6.7 million in 2024[260] - Net income after taxes for the six months ended June 30, 2025, was $8,207,000, up from $4,058,000 in 2024, representing a growth of 102.7%[275] - Net income attributable to shareholders increased to $11.1 million and $23.1 million for the three and six months ended June 30, 2025, compared to $7.1 million and $17.1 million for the same periods in 2024, representing increases of 56.3% and 35.3% respectively[292] Loan Portfolio - Consumer loans represented 95% of the gross loan portfolio, while commercial loans accounted for 5%[203] - Total gross loans as of June 30, 2025, amounted to $2,485.1 million, with notable growth in the recreation segment[234] - Loan originations for the six months ended June 30, 2025, totaled $656.7 million, compared to $482.2 million for the same period in 2024[235] - The recreation loan portfolio was valued at $1.5 billion as of June 30, 2025, with an average interest rate of 15.12%, up 32 basis points from the previous year[255] - The home improvement loan portfolio totaled $803.5 million as of June 30, 2025, with an allowance for credit losses increasing by 11% year-over-year[265] - The average loan size in the recreation loan portfolio was approximately $21,000 as of June 30, 2025[253] - The commercial lending segment originated $19.1 million in new loans during the six months ended June 30, 2025[273] Credit Quality - The allowance for credit losses was $103.12 million as of June 30, 2025, up from $86.65 million in the previous year[218] - The provision for credit losses for the three months ended June 30, 2025, was $21.6 million, compared to $18.6 million for the same period in 2024, reflecting rising loss rates and fluctuations in delinquencies[238] - The allowance for credit losses as a percentage of nonaccrual loans was 288.09% as of June 30, 2025[244] - The total loans 90 days or more past due increased to $28.96 million (1.2%) as of June 30, 2025, compared to $27.74 million (1.1%) at December 31, 2024[248] - The weighted average FICO score for outstanding recreation loans was 685 as of June 30, 2025, consistent with the previous year, indicating stable credit quality[222] - The net charge-offs as a percentage of average loans receivable were 2.44% and 2.77% for the three and six months ended June 30, 2025, compared to 2.20% and 2.68% in 2024, indicating a rise in credit risk[296] Interest Rates and Borrowing - The average cost of interest-bearing liabilities was 4.20% for the three months ended June 30, 2025, compared to 3.82% for the same period in 2024[218] - The average interest cost for the six months ended June 30, 2025, was 4.19%, up 44 basis points from 3.75% in the same period of 2024, primarily due to the higher cost of deposits[224] - The average interest rate for trust preferred securities is 6.70%, with a maturity date of September 2037[332] - The average interest rate for privately placed notes is 8.12%, with maturities ranging from February 2026 to August 2039[332] - The company expects borrowing costs to further increase due to higher prevailing rates on deposits and borrowings[230] - The average cost of borrowed funds increased to 4.20% and 4.19% for the three and six months ended June 30, 2025, compared to 3.82% and 3.75% in 2024, reflecting an increase of 38 and 44 basis points[298] Strategic Initiatives - The strategic partnership program with fintech companies was launched in 2019, with the first loans issued in 2020, and continues to expand[208] - The company is considering various alternatives for the Bank, including an initial public offering or potential sale, with no set deadline for these considerations[209] - The company continues to seek SBA funding, with an $18.5 million commitment obtained in February 2024, of which $10.3 million is currently drawable[231] - The company is exploring various financing options, including the sale or spinoff of certain assets, to support external expansion and internal growth[329] Operational Metrics - The company maintains relationships with approximately 3,300 dealers and financial service providers, with the top ten responsible for 40% of new loan originations in recreation lending for the six months ended June 30, 2025[252] - The company maintains relationships with approximately 700 contractors and FSPs in the home improvement lending segment, with the top ten contractors responsible for 64% of new loan originations[263] - The company has various liquidity sources, including brokered certificates of deposit, unfunded commitments, and loan sales, to support its operations[311] - The company has utilized borrowing arrangements with other banks and generated liquidity through deposits and SBA debentures[334] Capital Management - The company issued 3,100,000 shares of Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series G, in May 2025, raising net proceeds of $73.1 million with a fixed dividend rate of 9.00% per annum[312] - The company has authorized a stock repurchase program of up to $40 million, with $14,406,534 remaining for repurchase as of June 30, 2025[336] - The company redeemed its Series F Preferred Stock for an aggregate amount of $46.0 million on July 1, 2025, resulting in a charge of approximately $3.5 million to earnings attributable to common shareholders[320] Market Risk and Interest Rate Exposure - The company actively monitors interest rate exposure to mitigate adverse effects on future earnings, utilizing net interest income sensitivity analysis as a primary metric[309] - As of June 30, 2025, the company's interest rate sensitive assets totaled $2.7 billion, while interest rate sensitive liabilities were $2.3 billion, resulting in a one-year cumulative interest rate gap of negative $563.4 million, or 21% of interest rate sensitive assets[309] - Loan prepayments are significantly influenced by general interest rates and economic conditions, impacting funding sources[333] - There has been no material change in market risk disclosures since the last annual report filed[338]
Medallion Bank Series G Pfd(MBNKO) - 2025 Q2 - Quarterly Report