Financial Data and Key Metrics Changes - Net interest income grew 21% year-over-year to $44 million, driven by growth in the loan portfolio, which now stands at just under $2 billion [5][39] - Net income for the quarter was $15.4 million, or $0.67 per share, with a return on equity of over 20% and return on assets nearly at 3% [9] - The net interest margin on gross loans was 8.42%, down from 8.91% in the prior year quarter, reflecting the current interest rate environment [29] Business Line Data and Key Metrics Changes - The Home Improvement segment continued to be the fastest-growing, with strong originations related to popular projects like roofs, windows, and pools [2] - The recreational business, mainly loans for smaller boats and RVs, had over $100 million in originations, which is below peak levels but still considered strong [2] - The commercial business reached $95 million in loans outstanding, up from $78 million a year ago, and earned just over $1 million for the quarter [10] Market Data and Key Metrics Changes - The average interest rate remained above 14%, with expectations for continued growth in yield and coupon as older loans run off [2][16] - The company experienced a 2% increase in operating expenses, attributed to higher salary and employee benefit costs [6] Company Strategy and Development Direction - The company remains confident in its business model as a specialty finance company, utilizing broker deposits to fund loan growth, which helps manage borrowing costs and provides safety [3][4] - The strategy includes maintaining a strong focus on consumer lending while preparing for future growth amid the current banking environment [11][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model under various conditions, despite challenges in the banking sector [3][4] - The provision for credit losses was $4 million for the quarter, reflecting a normalization of losses to historic levels, with significant recoveries from the Medallion segment [6][40] Other Important Information - The company declared and paid a dividend of $0.08 per share for the fifth consecutive quarter, opting not to repurchase any stock during the quarter to retain capital for growth [11] - Cash collections from Medallion assets were notably strong, with over $13 million collected in the quarter, higher than normal [37][56] Q&A Session Summary Question: Why did yields decline in the Home Improvement segment? - Management explained that various factors beyond the coupon rate affect yield calculations, and while yields have come down, they expect continued growth as older loans are replaced with newer ones [16] Question: What are the expectations for originations in Home Improvement versus recreational loans for the rest of the year? - Management indicated that Home Improvement originations are expected to be stronger, while recreational loans may be softer in comparison [21] Question: Can you discuss the rates on the $500 million CDs coming due in 2023? - Management noted that CD rates have increased over the past 1.5 years, and while there may be some downward pressure on rates, they expect to see growth in yield and coupon as the loan portfolio matures [16][31]
Medallion Financial (MFIN) - 2023 Q1 - Earnings Call Transcript