Medallion Financial (US:MFIN)2019-08-07 03:20Financial Data and Key Metrics Changes - The net portfolio decreased to $121 million, a 53% decrease from Q2 2018 and a 14% decrease from Q1 2019 [6][16] - The net loss for Q2 was $7.5 million or $0.31 per share, compared to a net loss of $14.6 million or $0.60 per share in the prior year [14] - Cash flow from operations increased to $19.3 million in Q2 2019 from $16.1 million in Q1 2019, a 20% increase [14] - The provision for Medallion loan losses was $8.2 million, compared to $5.3 million in Q1 2019 and $24.8 million in the prior year [16] Business Line Data and Key Metrics Changes - Medallion Bank originated $226.5 million in loans for recreational vehicles and home improvement, up from $217.9 million in the same period last year [9] - The net consumer portfolio stood at $863 million, a 9% increase from $792 million in Q1 2019 [10] - The commercial lending segment grew its portfolio by 18% quarter-over-quarter, with net income of $141,000 for Q2 [11][18] Market Data and Key Metrics Changes - The average interest rate on the consumer loan portfolio was 14.82%, slightly down from 14.94% in Q1 2019 [17] - The commercial lending segment's average interest rate was 13.75%, consistent with the previous quarter [18] Company Strategy and Development Direction - The company is focusing on strategic partnerships with financial technology companies to enhance its consumer portfolio [11][22] - The management is optimistic about the growth potential in consumer and commercial lending segments, expecting strong loan demand in the coming quarters [18][28] Management Comments on Operating Environment and Future Outlook - Management expressed confidence that losses from Medallion loans will continue to decrease in the upcoming quarters [24] - There is a positive sentiment in the industry regarding medallion prices, with expectations of recovery due to upcoming congestion pricing in New York [31][32] Other Important Information - The bank recorded a Tier 1 leverage ratio of 15.96% and a 35% efficiency ratio, indicating strong capital and operational efficiency [12][15] - The company is exploring additional products to complement its consumer portfolio [10] Q&A Session Summary Question: Can you expand on the strategic partnerships and expected outcomes? - Management highlighted the advantages of Utah ILCs for FinTech partnerships and expects to finalize a partnership by January [22][23] Question: How can provisioning for Medallion loans be forecasted? - Management noted that forecasting is challenging due to the unpredictable nature of losses but expressed optimism about decreasing losses moving forward [24] Question: What is the outlook on loan demand? - Management indicated strong demand across core business lines, with expectations of continued growth [28] Question: Any updates on medallion recovery? - Management mentioned ongoing settlement discussions with larger customers and a positive outlook for medallion prices [30][31] Question: What is the current status of Medallion valuations? - Management reported significant variability in medallion prices, with cash deals dropping to around $110,000 and finance deals reaching up to $300,000 [36][37]