Medallion Financial (US:MFIN)2023-03-10 21:10Financial Position - As of December 31, 2022, total assets were $2.3 billion, an increase from $1.9 billion in 2021[204] - Total assets grew to $2,079,250,000 in 2022, up from $1,732,600,000 in 2021, indicating overall growth in the company's financial position[225] - Total stockholders' equity increased to $293,720,000 in 2022 from $254,749,000 in 2021, reflecting improved financial health[225] - Total debt outstanding as of December 31, 2022, was $1,833,434,000, compared to $1,478,001,000 in 2021, reflecting an increase of 24%[314] Loan Portfolio - Consumer loans represented 94% of the gross loan portfolio, while commercial loans accounted for 5%[204] - Total loans reached $1,656,998,000 in 2022, with significant contributions from home improvement loans at $517,192,000 and recreation loans at $1,048,068,000[225] - Total loans increased to $1,916,953,000 as of December 31, 2022, up from $1,488,924,000 in 2021, representing a growth of approximately 28.7%[232] - Loan originations for 2022 totaled $983,908,000, compared to $747,371,000 in 2021, indicating a year-over-year increase of about 31.6%[232] - The recreation loan portfolio grew to $1,183,512,000 in 2022, up from $961,320,000 in 2021, reflecting an increase of approximately 23.1%[232] - Home improvement loans also saw growth, reaching $626,399,000 in 2022, compared to $436,772,000 in 2021, marking a rise of about 43.4%[232] Loan Performance and Risk - The allowance for loan losses increased to $63.845 million as of December 31, 2022, from $50.166 million in 2021, primarily due to growth in the loan portfolio and higher net charge-offs[238] - The provision for loan losses rose significantly to $30.059 million in 2022, compared to $4.622 million in 2021, indicating increased risk in the loan portfolio[238] - The net charge-off percentage increased to 1.27% in 2022 from 0.30% in 2021, reflecting a rise in loan defaults[252] - The overall delinquency status for loans was 0.64% as of December 31, 2022, compared to 0.41% in 2021, indicating a deterioration in loan performance[252] Interest Income and Margin - The company reported net interest income of $160,430,000 for the year ended December 31, 2022, compared to $127,820,000 in 2021[225] - Total interest income for the year ended December 31, 2022, was $139.145 million, up from $118.305 million in 2021, reflecting a growth in the recreation lending segment[252] - The net interest margin for 2022 was 9.05%, compared to 9.25% in 2021, indicating a slight compression in profitability[225] - Total interest income increased to $196.6 million for the year ended December 31, 2022, compared to $159.0 million in 2021, driven by growth in recreation and home improvement lending segments[278] Economic Factors and Strategic Initiatives - The company continues to monitor economic factors such as inflation, labor shortages, and gas prices that may impact loan demand[205] - The Bank launched a strategic partnership program with fintech companies in 2019, continuing to evaluate additional partnerships[208] - The company actively seeks additional sources of liquidity but acknowledges potential challenges in securing favorable terms due to market conditions[316] Accounting and Regulatory Changes - The anticipated adoption of the Current Expected Credit Loss (CECL) accounting standard is expected to increase the allowance for loan losses by $11.6 million for consumer loans and $2.2 million for commercial loans[219] - The adoption of new accounting standards is expected to have a near-term effect of larger loan loss provisions compared to previous standards[317] Interest Rate Exposure - As of December 31, 2022, interest rate sensitive assets totaled $2.1 billion, while interest rate sensitive liabilities amounted to $1.8 billion, resulting in a one-year cumulative interest rate gap of negative $367.8 million, or 18% of interest rate sensitive assets[296] - The company actively monitors interest rate exposure to mitigate adverse impacts on future earnings, utilizing net interest income sensitivity analysis as the primary metric[296] - A hypothetical immediate 1% increase in interest rates would increase net income by $1.2 million annually, while a similar increase over one year would have reduced net income by $1.4 million[311]