Medallion Financial Corp 8-K, filed Jan 29, 2021
Medallion Financial Corp (MFIN)
About this 8-K
Medallion Financial Corp filed this 8-K on January 29, 2021.
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
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| 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, 2020.
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 29, 2021 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
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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 29, 2021
| MEDALLION FINANCIAL CORP. | ||
| By: | /s/ Larry D. Hall | |
| Name: | Larry D. Hall | |
| Title: | Chief Financial Officer | |
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Exhibit 99.1
FOR IMMEDIATE RELEASE:
MEDALLION BANK REPORTS 2020 FOURTH QUARTER AND FULL YEAR
RESULTS AND DECLARES SERIES F PREFERRED STOCK DIVIDEND
SALT LAKE CITY, UT – January 29, 2021 – 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).
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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.
Company Contact:
Alex E. Arzeno
Investor Relations
212-328-2168
InvestorRelations@medallion.com
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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 | ||||||||||||
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| Net interest income |
31,334 | 27,734 | 118,324 | 104,202 | ||||||||||||
| Provision for loan losses |
(3,959 | ) | 9,791 | 63,048 | 42,492 | |||||||||||
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| Net interest income after provision for loan losses |
35,293 | 17,943 | 55,276 | 61,710 | ||||||||||||
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| Other income (loss) |
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| 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 | ||||||||||||
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| Total other income (loss) |
(7,307 | ) | (117 | ) | (17,938 | ) | (2,238 | ) | ||||||||
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| Non-interest expense |
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| 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 | ||||||||||||
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| Total non-interest expense |
8,484 | 8,921 | 33,895 | 33,482 | ||||||||||||
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| Income before income taxes |
19,502 | 8,905 | 3,443 | 25,990 | ||||||||||||
| Provision for income taxes |
5,177 | 2,206 | 928 | 5,544 | ||||||||||||
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| Net income |
$ | 14,325 | $ | 6,699 | $ | 2,515 | $ | 20,446 | ||||||||
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MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)
| (In thousands) |
December 31, 2020 | December 31, 2019 | ||||||
| Assets |
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| 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 | ) | ||||
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| 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 | ||||||
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| Total assets |
$ | 1,291,367 | $ | 1,193,230 | ||||
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| Liabilities and shareholders’ equity |
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| 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 | ||||||
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| Total liabilities |
1,072,893 | 966,089 | ||||||
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| Total shareholders’ equity |
218,474 | 227,141 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,291,367 | $ | 1,193,230 | ||||
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