Medallion Financial (US:MFIN)2025-10-30 14:00Financial Data and Key Metrics Changes - Net income for Q3 2025 was $7.8 million, or $0.32 per diluted share, which includes a non-recurring charge of $3.5 million related to the redemption of Series F preferred stock, resulting in adjusted earnings of $11.3 million [4][19] - Net interest income increased by 6% to $55.7 million, with a net interest margin of 8.21%, up 10 basis points from the previous year [14][4] - Total loans reached $2.559 billion, reflecting a 3% increase year-over-year [15] Business Line Data and Key Metrics Changes - Consumer lending, the largest segment, generated interest income of $74.1 million, a 5% increase, despite originations decreasing to $201.4 million from $235.6 million a year ago [5][6] - Recreational loans grew 3% to $1.603 billion, representing 63% of total loans, with delinquencies of 90+ days at 0.57% [6] - Home improvement loans decreased to $804 million, with originations of $59.7 million, and delinquencies at 0.16% [6] - Commercial loans reached $135.1 million, with new originations of $17.5 million [9] Market Data and Key Metrics Changes - The strategic partnership program saw record originations of $208.4 million, contributing approximately $1.5 million in fees and interest for the quarter [10][11] - The average interest rate on recreation loans was 15.77%, while home improvement loans averaged 10.9% [14] Company Strategy and Development Direction - The company is focused on disciplined execution and strategic positioning to drive growth across its lending segments [5] - Plans to expand the strategic partnership program by adding new partners in the coming quarters [10][40] - The company aims to maintain a growth strategy that has successfully guided its lending business over the past several years [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustainable growth and attractive shareholder returns, supported by a diversified portfolio and prudent underwriting standards [12][13] - The company anticipates continued margin expansion and loan growth, particularly in the home improvement segment [43][46] Other Important Information - The company paid a quarterly dividend of $0.12 per share and has $14.4 million remaining under a $40 million share repurchase program [12] - The net book value per share increased to $17.07, up from $16.77 in the previous quarter [19] Q&A Session Summary Question: Was the operating EPS $0.46 a share? - Answer: The operating EPS was $0.32, with the $0.14 impact from the Series F preferred stock redemption bringing it to $0.46 [23][24] Question: Were there any loans sold in the quarter? - Answer: Other than within the strategic partnership program, there are plans to sell recreation loans in the next couple of quarters [25] Question: Does the increase in non-controlling income relate to the Series F preferred stock redemption? - Answer: Yes, the decrease on the balance sheet is due to the redemption of Series F [26] Question: What should be the non-controlling income quarterly going forward? - Answer: It is expected to be $2.33 million [28] Question: Do you have exposure to government employees given the government shutdown? - Answer: No, there is no exposure that would affect the company [31] Question: What is the outlook for strategic originations and fees in 2026? - Answer: The strategic partnership program is expected to continue growing, with plans to add new partners [40] Question: Why were recreation originations flat year over year? - Answer: The company raised credit standards and was cautious due to capital levels [41] Question: How should margins be viewed going forward with recent Fed rate cuts? - Answer: The trend of margin expansion is expected to continue, with a potential drop in the cost of funds [43] Question: What is the outlook for overall loan growth? - Answer: The company is optimistic about loan growth, especially with new talent in home improvement lending [46]