Medallion Financial (US:MFIN)2020-05-01 20:01Financial Data and Key Metrics Changes - The company reported a net loss of $13.6 million or $0.56 per share for Q1 2020, compared to a net income of $1.2 million or $0.05 per share in the same quarter of the previous year [16] - Total provision for loan losses was $16.5 million in the quarter, an increase from $13.3 million in Q1 2019 [18] - The net medallion loan portfolio decreased to $96.2 million, a 31% decrease from Q1 2019 [19] Business Line Data and Key Metrics Changes - Net income from consumer and commercial segments totaled $4.3 million in Q1 2020, down from $7 million in Q1 2019 [10] - Consumer originations were $103.1 million for Q1 2020, up from $90.3 million in the same period of 2019 [10] - The net commercial lending portfolio was $64.9 million as of March 31, 2020, a 27% increase from Q1 2019 [13] Market Data and Key Metrics Changes - The net collateral value in the New York City market dropped from $167,000 at the end of 2019 to $124,500 at the end of Q1 2020, a 25% reduction [7] - Consumer loan delinquencies were $5.4 million or 0.56% of total gross loans as of March 31, 2020, compared to $6 million or 0.64% at year-end [20] Company Strategy and Development Direction - The company is focused on growing both consumer and commercial segments despite the challenges posed by COVID-19 [8] - Management is optimistic about capturing market share as other lenders have pulled back from the marketplace [11] - The company is divesting from non-core assets to focus on profitable lines of business, particularly in RV, marine, and home improvement lending [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future and the potential for recovery in the consumer lending market [10] - The company is monitoring developments regarding aid from the U.S. and New York State for the taxi medallion industry [7] - Management noted that the current economic environment has presented opportunities for growth despite the challenges [11] Other Important Information - The average interest rate on the consumer loan portfolio was 14.42% in Q1 2020, down from 14.94% in the same period last year [21] - The company took a charge of $3.5 million pretax related to a non-core sports equity investment in Q1 2020 [14] Q&A Session Summary Question: Can you provide more details on the cost-cutting measures initiated in April? - The company furloughed about 14 employees in the medallion area, which was overdue given the reduction in concentration in that segment [27] Question: How should we think about sponsorship and race winnings for the remainder of 2020? - NASCAR is reopening, and the company is hopeful for profitability, but the La Crosse investment has been divested to focus on core business [29][32] Question: What are the reserves for the recreation and home improvement portfolios? - Recreation reserves were about $22.3 million, and home improvement reserves were about $3.5 million, with an increase in reserves due to anticipated borrower issues [34] Question: How has April gone for consumer business? - April showed a bright spot with applications up significantly, particularly in home improvement, indicating potential growth [49] Question: What is the current status of the commercial lending segment? - There have been minimal impairments, with only one company on non-accrual among the portfolio [52]