Medallion Financial (US:MFIN)2019-11-01 21:25Financial Data and Key Metrics Changes - Net income for Q3 2019 was $5 million or $0.20 per share, compared to a net loss of $4.7 million or $0.19 per share in the prior year period and a net loss of $7.5 million or $0.31 per share in Q2 2019 [13] - Cash flow from operations increased 13% to $21.8 million in Q3 2019 from $19.3 million in Q2 2019 and was up 35% from $16.1 million in Q1 2019 [13] - The provision for Medallion loan losses was $1.9 million in Q3 2019, down from $8.2 million in Q2 2019 and $5.3 million in Q1 2019 [15] Business Line Data and Key Metrics Changes - The consumer and commercial segments recorded $27.5 million of net interest income for Q3 2019 and $77 million for the first nine months of the year [7] - Medallion Bank originated $351.8 million of recreational and home improvement loans in the first nine months of 2019, compared to $333.4 million in the same period last year, including $125.3 million in Q3 2019 [8] - The commercial lending segment recorded net income of $986,000 in Q3 2019, compared to $147,000 in Q2 2019 [16] Market Data and Key Metrics Changes - The net consumer portfolio stood at $919 million as of September 30, 2019, a 24% increase from Q3 2018 and has grown 21% year-to-date [8] - The average interest yield for the commercial lending segment was 11.09% in Q3 2019, down from 12.33% in the prior year period [16] Company Strategy and Development Direction - The company is focused on building strategic partnerships with financial technology companies, aiming to have relationships established by the first or second quarter of 2020 [9][32] - The company is cautiously optimistic about growth, emphasizing the importance of maintaining credit quality and underwriting standards in light of potential economic downturns [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the worst of the Medallion loan losses is behind them, although some choppiness may occur [37] - Positive regulatory changes in New York, such as the approval of electric taxis, are expected to benefit the cab industry [40] Other Important Information - The company has net operating loss carryforwards of $87 million, which can offset future taxable income [11] - The bank recorded a Tier one leverage ratio of 15.91% at the end of Q3 2019, with an efficiency ratio well below the optimal 50% [10] Q&A Session Summary Question: Did Medallion Bank receive a credit for their FDIC assessment in Q3? - Yes, it was $224,000 [22] Question: What contributed to the higher sponsorship and race winnings this quarter? - Increased interest in the racing team due to large contracts and diversity funding [23] Question: What is the outlook for the Medallion loan portfolio provisioning? - Management is confident that the worst is behind them, but some losses may still occur [37] Question: What was the origination volume for consumer lending in Q3? - The origination volume was $125.3 million for the quarter [38] Question: Any updates on regulatory changes that could benefit the cab industry? - Approval of electric taxis and congestion pricing are expected to positively impact the industry [40] Question: What is the status of Medallion pricing? - The average price was $200,000 and the median was about $175,000 [47] Question: How is the company managing its capital raised from subordinated debt? - The capital has been used for general corporate purposes and to pay down debt [53] Question: Is there a plan for the bank to pay a dividend next year? - A dividend is likely, but the company wants to monitor growth first [55]