Medallion Financial Corp 8-K, filed Jan 30, 2023
Medallion Financial Corp (MFIN)
About this 8-K
Medallion Financial Corp filed this 8-K on January 30, 2023.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
(Address of principal executive offices) (Zip code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 7.01 | Regulation FD Disclosure. |
Medallion Bank, a wholly owned subsidiary of Medallion Financial Corp. (the “Company”), issued a press release to the news media announcing, among other things, Medallion Bank’s results for the quarter and year ended December 31, 2022.
A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information in the press release is being furnished, not filed, pursuant to Item 7.01. Accordingly, the information in the press release will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
The following exhibits are being filed with this Current Report on Form 8-K:
| 99.1 | Medallion Bank press release, dated January 30, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
- 2 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 30, 2023
| MEDALLION FINANCIAL CORP. | ||
| By: | /s/ Anthony N. Cutrone | |
| Name: Anthony N. Cutrone | ||
| Title: Chief Financial Officer | ||
- 3 -
Exhibit 99.1
FOR IMMEDIATE RELEASE:
MEDALLION BANK REPORTS 2022 FOURTH QUARTER AND FULL-YEAR RESULTS AND DECLARES SERIES F PREFERRED STOCK DIVIDEND
SALT LAKE CITY, UT – January 30, 2023 – 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 strategic partners, announced today its results for the quarter and year ended December 31, 2022. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).
2022 Fourth Quarter Highlights
| • | Net income of $19.7 million, compared to net income of $19.0 million in the prior year quarter. |
| • | Net interest income of $44.4 million with a net interest margin of 9.2%, compared to $37.3 million and 9.9% in the prior year quarter. |
| • | Provision for loan losses was $8.4 million, compared to $1.6 million in the prior year quarter. |
| • | Annualized net charge-offs were 1.7% of average loans outstanding, compared to 0.3% in the prior year quarter. |
2022 Full-Year Highlights
| • | Record net income of $74.6 million, compared to net income of $70.0 million in 2021. |
| • | Net interest income of $164.6 million with a net interest margin of 9.4%, compared to $136.8 million and 10.0% in 2021. |
| • | ROA and ROE were 4.2% and 26.5%, respectively, for the year ended December 31, 2022, compared to 5.0% and 29.1% for the prior year. |
| • | Provision for loan losses was $24.7 million, compared to $3.7 million in 2021. |
| • | Net charge-offs were 1.0% of average loans outstanding, compared to 1.2% in 2021. |
| • | The total loan portfolio grew 28.8% to $1.8 billion during the year. |
| • | Total assets were $2.0 billion, total capital was $306.7 million, and the Tier 1 leverage ratio was 16.2% at December 31, 2022. |
Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “We had another tremendous year. We closed out 2022 with record annual net income driven by growth in our recreation and home improvement lending segments. In the fourth quarter, net income was a record high even with recreation loan demand and loan loss provisions continuing to move toward historical levels. We believe our culture, our team, and our superior customer service model have positioned us well for the coming year.”
Recreation Lending Segment
| • | The Bank’s recreation loan portfolio grew 22.6% to $1.2 billion as of December 31, 2022, compared to $965.3 million at December 31, 2021. |
| • | Net interest income was $33.4 million, compared to $28.7 million in the prior year quarter. |
| • | Recreation loans were 64.9% of loans receivable as of December 31, 2022, compared to 68.2% at December 31, 2021. |
| • | The quarterly provision for recreation loan losses was $7.3 million, compared to $2.1 million in the prior year quarter. |
| • | Annualized net charge-offs were 2.4% of average recreation loans outstanding, compared to 1.0% in the prior year quarter. |
Home Improvement Lending Segment
| • | The Bank’s home improvement loan portfolio grew 43.4% to $626.4 million as of December 31, 2022, compared to $436.9 million at December 31, 2021. |
| • | Net interest income was $10.5 million, compared to $8.5 million in the prior year quarter. |
| • | Home improvement loans were 34.4% of loans receivable as of December 31, 2022, compared to 30.9% at December 31, 2021. |
| • | The provision for home improvement loan losses was $2.7 million, compared to $1.2 million in the prior year quarter. |
| • | Annualized net charge-offs were 1.1% of average home improvement loans outstanding, compared to annualized net charge-offs of 0.4% in the prior year quarter. |
Current Expected Credit Loss Adoption on January 1
On January 1, 2023, we formally adopted the Current Expected Credit Loss accounting standard (Topic 326), otherwise known as CECL. Our preliminary calculation of the CECL transition amount on that date was a $11.6 million increase in our allowance for loan losses, or allowance for credit losses as it is called under CECL. This was an increase in the combined recreation and home improvement loan allowance of approximately 22%, and was recorded in retained earnings with no impact on net income. The medallion loan allowance was not affected. With the adoption of CECL, we expect that there will be earlier recognition of credit losses, including a near-term effect of larger loan loss provisions compared to the incurred losses accounting standard.
Series F Preferred Stock Dividend
On January 26, 2023, 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 3, 2023, to holders of record at the close of business on March 15, 2023.
* * *
About Medallion Bank
Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats, and home improvements, along with loan origination services to fintech strategic 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 and is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).
2
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, returns and growth. These statements are often, but not always, made through the use of words or phrases such as “will” or “expect,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature, such as “continuing.” These statements relate to our future earnings, returns, capital levels, growth prospects, asset quality and pursuit and execution of our strategy. Medallion Bank’s actual results may differ significantly from the results discussed in such forward-looking statements. 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, 2021, and in its Quarterly Reports on Form 10-Q, 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. In addition, Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period.
Statements about Medallion Bank’s preliminary calculations relating to the impact of adopting CECL consist of preliminary estimates. These estimates are forward-looking statements and are subject to change, possibly materially, as Medallion Bank completes its financial statements for the first quarter of 2023.
Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com
3
MEDALLION BANK
STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||
| (In thousands) |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Total interest income |
$ | 51,774 | $ | 41,436 | $ | 187,272 | $ | 154,310 | ||||||||
| Total interest expense |
7,361 | 4,178 | 22,667 | 17,544 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net interest income |
44,413 | 37,258 | 164,605 | 136,766 | ||||||||||||
| Provision for loan losses |
8,409 | 1,578 | 24,709 | 3,746 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net interest income after provision for loan losses |
36,004 | 35,680 | 139,896 | 133,020 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income (loss) |
||||||||||||||||
| Write-downs of loan collateral in process of foreclosure and other assets |
(49 | ) | (140 | ) | (582 | ) | (2,990 | ) | ||||||||
| Other non-interest income |
280 | 386 | 1,237 | 1,144 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (loss) |
231 | 246 | 655 | (1,846 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-interest expense |
||||||||||||||||
| Salaries and benefits |
4,430 | 3,838 | 15,086 | 12,237 | ||||||||||||
| Loan servicing |
2,571 | 2,756 | 10,843 | 10,692 | ||||||||||||
| Collection costs |
1,445 | 1,305 | 5,385 | 4,775 | ||||||||||||
| Regulatory fees |
797 | 489 | 2,418 | 1,872 | ||||||||||||
| Professional fees |
446 | 366 | 1,754 | 1,695 | ||||||||||||
| Occupancy and equipment |
209 | 217 | 793 | 789 | ||||||||||||
| Other |
1,154 | 872 | 4,248 | 3,552 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-interest expense |
11,052 | 9,843 | 40,527 | 35,612 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before income taxes |
25,183 | 26,083 | 100,024 | 95,562 | ||||||||||||
| Provision for income taxes |
5,460 | 7,071 | 25,386 | 25,563 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 19,723 | $ | 19,012 | $ | 74,638 | $ | 69,999 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
4
MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)
| (In thousands) | December 31, 2022 | December 31, 2021 | ||||||
| Assets |
||||||||
| Cash and federal funds sold |
$ | 74,078 | $ | 61,402 | ||||
| Investment securities, available-for-sale |
48,492 | 44,772 | ||||||
| Loans, inclusive of net deferred loan acquisition costs |
1,822,737 | 1,415,415 | ||||||
| Allowance for loan losses |
(61,630 | ) | (53,384 | ) | ||||
|
|
|
|
|
|||||
| Loans, net |
1,761,107 | 1,362,031 | ||||||
| Loan collateral in process of foreclosure |
10,381 | 21,438 | ||||||
| Fixed assets and right-of-use lease assets, net |
6,600 | 4,230 | ||||||
| Deferred tax assets |
9,241 | 7,576 | ||||||
| Accrued interest receivable and other assets |
40,928 | 37,786 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,950,827 | $ | 1,539,235 | ||||
|
|
|
|
|
|||||
| Liabilities and Shareholders’ Equity |
||||||||
| Liabilities |
||||||||
| Deposits and other funds borrowed |
$ | 1,607,110 | $ | 1,250,880 | ||||
| Accrued interest payable |
2,422 | 1,228 | ||||||
| Income tax payable |
23,165 | 16,104 | ||||||
| Other liabilities |
10,613 | 7,670 | ||||||
| Due to affiliates |
862 | 906 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,644,172 | 1,276,788 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
306,655 | 262,447 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 1,950,827 | $ | 1,539,235 | ||||
|
|
|
|
|
|||||
5