MBNKP Medallion Bank

Medallion Bank (Nasdaq:MBNKP, “the Bank”), an FDIC-insured bank providing consumer loans for the purchase of recreational vehicles, boats, and home improvements, along with loan origination services to fintech partners, announced today its 2020 fourth quarter and full year results. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq:MFIN).

2020 Fourth Quarter Highlights

• Record quarterly net income of $14.3 million, compared to net income of $6.7 million in the prior year period.
• Quarterly net interest income was $31.3 million, compared to $27.7 million in the prior year period.
• Quarterly provision for loan losses was a benefit of $4.0 million, compared to a loss of $9.8 million in the prior year period.
• Net charge-offs were 9.68% of average loans outstanding, driven primarily by medallion loan charge-offs, compared to 3.14% in the prior year period.
• The total exposure of the medallion lending segment, which includes loans in process of foreclosure and remarketed assets, was $44.9 million, or 3% of total assets, as of December 31, 2020, compared to $116.8 million, or 10%, at December 31, 2019. Of that exposure, the medallion loan portfolio net of the allowance for loan losses was $7.9 million as of December 31, 2020, compared to $80.1 million at December 31, 2019.
• Total assets were $1.3 billion as of December 31, 2020.
• The Bank had $218.5 million in capital and a Tier 1 leverage ratio of 16.93% as of December 31, 2020.

2020 Full Year Highlights

• Net income was $2.5 million, compared to net income of $20.4 million in 2019.
• Net interest income was $118.3 million, compared to $104.2 million in 2019.
• Return on assets was 0.20%, compared to 1.85% in 2019.
• Provision for loan losses was $63.0 million, compared to $42.5 million in the prior year.
• Net charge-offs were 4.98% of average loans outstanding, compared to 4.23% in 2019.
• The recreation loan portfolio grew 11% and the home improvement loan portfolio grew 35% in 2020.
• All medallion loans were placed on nonaccrual during the 2020 third quarter and New York medallions were adjusted down to a collateral value of $79,500, net of liquidation costs, as of December 31, 2020.
• The medallion loan portfolio decreased from $107.7 million to $32.7 million, or 70%, during 2020.

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “After a challenging third quarter, the Bank finished 2020 with the best quarterly net income in its history. The results for our recreation and home improvement lending segments were strong despite the ongoing pandemic, contributing $48 million in annual net income to the Bank and $15 million for the quarter. Net charge-offs remained low in those segments when compared to periods prior to COVID, in part due to government stimulus and tighter underwriting standards during the year. As reported for September 2020, we substantially de-risked our balance sheet by placing all medallion loans on nonaccrual and in the fourth quarter, we further adjusted the carrying amounts of New York City medallion loans and repossessed assets down to a net collateral value of $79,500 from $90,300 per medallion. The Bank maintains a strong capital position that we expect will allow us to grow our core consumer lending segments, which are experiencing strong demand.”

Recreation Lending Segment

The Bank’s recreation loan portfolio was $799 million as of December 31, 2020, compared to $722 million at December 31, 2019. Net interest income for the fourth quarter was $24.9 million, compared to $22.8 million in the prior year period. Recreation loans were at 68% and 67% of loans receivable as of December 31, 2020 and December 31, 2019, respectively. The provision for recreation loan losses was $3.0 million, compared to $8.6 million in the prior year period. Gross recreation loans in a payment deferral state were $6.5 million, or 0.8% of the portfolio, as of December 31, 2020. Recreation loan delinquencies 90 days or more past due were $5.4 million, or 0.7% of gross recreation loans, as of December 31, 2020, compared to $5.9 million, or 0.8%, at December 31, 2019. Delinquencies were lower, at least in part, as a result of the COVID-related payment deferrals.

Home Improvement Lending Segment

The Bank’s home improvement loan portfolio was $334 million as of December 31, 2020, compared to $248 million at December 31, 2019. Net interest income for the fourth quarter was $6.8 million, compared to $4.5 million in the prior year period. Home improvement loans were 29% and 23% of loans receivable as of December 31, 2020 and December 31, 2019, respectively. The provision for home improvement loan losses was $0.7 million, compared to $0.8 million in the prior year period. Gross home improvement loans in a payment deferral state were $195,000, or 0.1% of the portfolio, as of December 31, 2020. Home improvement loan delinquencies 90 days or more past due were $171,000, or 0.05% of gross home improvement loans as of December 31, 2020, compared to $185,000, or 0.07%, at December 31, 2019. Delinquencies were lower, at least in part, as a result of the COVID-related payment deferrals.

Medallion Lending Segment

The Bank’s medallion loan portfolio before the allowance for loan losses was $33 million as of December 31, 2020, compared to $108 million at December 31, 2019. Medallion loans were 3% of the Bank’s loans receivable as of December 31, 2020, compared to 10% at December 31, 2019. The Bank’s medallion loan portfolio net of the allowance for loan losses was $8 million as of December 31, 2020, compared to $80 million at December 31, 2019. The total exposure of the medallion lending segment, which includes loans in process of foreclosure and remarketed assets, was $45 million, or 3% of total assets, as of December 31, 2020, compared to $117 million, or 10%, at December 31, 2019.

Unless otherwise specified, loan portfolios are presented net of deferred loan acquisition costs.

* * *

On January 28, 2021, the Bank’s Board of Directors declared a quarterly cash dividend of $0.50 per share on the Bank’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, which trades on the Nasdaq Capital Market under the ticker symbol “MBNKP.” The dividend is payable on April 1, 2021 to holders of record at the close of business on March 15, 2021.

* * *

About Medallion Bank

Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats and home improvements, and offering loan origination services to fintech partners. The Bank works directly with thousands of dealers, contractors and financial service providers serving their customers throughout the United States. Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City with an office in Bothell, Washington, and is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq:MFIN).

For more information, visit www.medallionbank.com.

Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, costs, sales, net investment income, earnings, and growth. These statements are often, but not always, made through the use of words or phrases such as “maintains,” “ongoing” and “will” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These statements relate to future public announcements of our earnings, the ongoing COVID-19 pandemic, the maintenance of our current capital levels, the potential for future asset growth and market share growth opportunities. Medallion Bank’s actual results may differ significantly from the results discussed in such forward-looking statements. For example, statements about the effects of the COVID-19 pandemic on Medallion Bank’s business, operations, financial performance and prospects constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond Medallion Bank’s control, including the scope and duration of the pandemic, the availability, use and effectiveness of a vaccine, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Medallion Bank, its customers and third parties. In addition, Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period. In addition to risks related to the ongoing COVID-19 pandemic, for a description of certain risks to which Medallion Bank is or may be subject, please refer to the factors discussed under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in Medallion Bank’s Form 10-K for the year ended December 31, 2019 and in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, filed with the FDIC. Medallion Bank’s Form 10-K, Form 10-Qs and other FDIC filings are available in the Investor Relations section of Medallion Bank’s website.

MEDALLION BANK

STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

For the Three Months Ended December 31,

 

For the Years Ended December 31,

(In thousands)

 

2020

 

2019

 

2020

 

2019

Total interest income

 

$

36,349

 

 

$

33,846

 

 

$

140,654

 

 

$

126,723

 

Total interest expense

 

5,015

 

 

6,112

 

 

22,330

 

 

 

22,521

 

Net interest income

 

 

31,334

 

 

 

27,734

 

 

 

118,324

 

 

 

104,202

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

(3,959

)

 

 

9,791

 

 

 

63,048

 

 

 

42,492

 

Net interest income after provision for loan losses

 

 

35,293

 

 

 

17,943

 

 

 

55,276

 

 

 

61,710

 

 

 

 

 

 

 

 

 

Other income (loss)

 

 

 

 

 

 

 

Write-downs of loan collateral in process of foreclosure and other assets

 

 

(7,393

)

 

 

(134

)

 

 

(18,199

)

 

 

(2,543

)

Other non-interest income

 

 

86

 

 

 

17

 

 

 

261

 

 

 

305

 

Total other income (loss)

 

 

(7,307

)

 

 

(117

)

 

 

(17,938

)

 

 

(2,238

)

 

 

 

 

 

Non-interest expense

 

 

 

 

Loan servicing

 

 

  2,739

 

 

 

2,725

 

 

11,158

 

 

 

10,610

 

Salaries and benefits

 

 

2,665

 

 

 

2,259

 

 

10,275

 

 

 

8,806

 

Collection costs

 

 

1,021

 

 

 

1,636

 

 

 

4,294

 

 

 

5,519

 

Professional fees

 

 

446

 

 

 

770

 

 

 

2,017

 

 

 

2,722

 

Regulatory fees

 

 

874

 

 

 

526

 

 

 

1,822

 

 

 

1,722

 

Occupancy and equipment

 

 

106

 

 

 

173

 

 

 

783

 

 

 

576

 

Other

 

 

633

 

 

 

832

 

 

 

3,546

 

 

 

3,527

 

Total non-interest expense

 

 

8,484

 

 

 

8,921

 

 

33,895

 

 

 

33,482

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

19,502

 

 

 

8,905

 

 

 

3,443

 

 

 

25,990

 

Provision for income taxes

 

 

5,177

 

 

 

2,206

 

 

 

928

 

 

 

5,544

 

 

 

 

 

 

 

 

 

Net income

 

$

14,325

 

 

$

6,699

 

 

$

2,515

 

 

$

20,446

 

MEDALLION BANK

BALANCE SHEETS

(UNAUDITED)

  (In thousands)   December 31, 2020   December 31, 2019  Assets         Cash and federal funds sold  

 $

                          58,977

 

 

 $

                          50,237

 

Investment securities, available-for-sale  

 

46,792

 

 

 

48,998

 

Loans, inclusive of net deferred loan acquisition costs  

 

1,167,748

 

 

 

1,079,553

 

Allowance for loan losses  

 

(65,557

)

 

 

(59,885

)

Loans, net  

 

1,102,191

 

 

 

1,019,668

 

Loan collateral in process of foreclosure  

 

35,557

 

 

 

30,639

 

Fixed assets and right-of-use assets, net  

 

3,418

 

 

 

3,852

 

Deferred tax assets  

 

11,839

 

 

 

11,419

 

Due from affiliates  

 

3,298

 

 

 

-

 

Income tax receivable  

 

549

 

 

 

-

 

Accrued interest receivable and other assets  

 

28,746

 

 

 

28,417

 

Total assets  

 $

                     1,291,367

 

 

 $

                     1,193,230

 

          Liabilities and shareholders' equity         Deposits and other funds borrowed  

 $

                     1,065,398

 

 

 $

                        951,651

 

Accrued interest payable  

 

1,515

 

 

 

2,096

 

Income taxes payable  

 

-

 

 

 

2,144

 

Other liabilities  

 

5,980

 

 

 

9,157

 

Due to affiliates  

 

-

 

 

 

1,041

 

Total liabilities  

 

1,072,893

 

 

 

966,089

 

          Total shareholders' equity  

 

218,474

 

 

 

227,141

 

Total liabilities and shareholders' equity  

 $

                     1,291,367

 

 

 $

                     1,193,230

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210129005045/en/

Company: Alex E. Arzeno Investor Relations 212-328-2168 InvestorRelations@medallion.com