Medallion Financial Corp 8-K, filed Nov 1, 2021
Medallion Financial Corp (MFIN)
About this 8-K
Medallion Financial Corp filed this 8-K on November 1, 2021.
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- 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
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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:
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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 2.02 | Results of Operations and Financial Condition. |
Medallion Financial Corp. (the “Company”), issued a press release to the news media announcing, among other things, the Company’s results for the quarter ended September 30, 2021.
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 2.02. 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 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(b) On November 1, 2021, Larry D. Hall notified the Company of his intention to retire from his positions as Senior Vice President and Chief Financial Officer of the Company, effective December 31, 2021.
(c) On November 1, 2021, the Board of Directors of the Company appointed Anthony N. Cutrone to succeed Larry D. Hall and serve as the Executive Vice President and Chief Financial Officer of the Company, effective January 1, 2022.
Mr. Cutrone, age 42, currently serves as the Director of Finance of the Company since May 2021 and previously served as the Assistant Controller and the Manager of Accounting and Financial Reporting from October 2007 through September 2020. From October 2020 through May 2021, Mr. Cutrone served as a Corporate Controller of Triplepoint Capital, LLC. From March 2004 to October 2007, he served as a Manager at Charles A. Barragato & Co., LLP (BDO USA, LLP). Prior to that, he served as an Audit Senior of BDO Seidman, LLP from October 2001 to March 2004. Mr. Cutrone is a certified public accountant, and received a Bachelor of Business Administration in accounting from Hofstra University.
The terms of Mr. Cutrone’s employment as Executive Vice President and Chief Financial Officer have not yet been determined.
| 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 | Press release, dated November 1, 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: November 1, 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 FINANCIAL CORP. REPORTS 2021 THIRD QUARTER RESULTS
NEW YORK, NY – November 1, 2021 – Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the “Company”), a finance company that originates and services loans in various consumer and commercial industries, announced today its 2021 third quarter results.
2021 Third Quarter Highlights
| • | Net income of $15.9 million, or $0.64 per share, compared to a net loss of $23.6 million, or $0.97 per share, in the prior year quarter. |
| • | Net interest income grew 17% to $34.1 million from $29.1 million in the prior year quarter. |
| • | Net interest margin was 9.48%, compared to 8.72% in the prior year quarter. |
| • | Loan originations increased 43% to $195.8 million, as compared to the prior year quarter. |
Executive Commentary – Andrew Murstein, President of Medallion
“This was in many ways the strongest quarter ever for Medallion. We achieved record performances across the board and are well-positioned to continue our growth moving forward. We are focusing on growing our consumer and commercial lending businesses, where our Bank subsidiary reported return on equity above 30% for the third quarter. In addition, we continue to explore dispositions of our non-core assets at opportunistic times. During the quarter we also successfully sold another tranche of shares in one of our fintech investments, and we are seeking additional investment opportunities in similar companies.”
Loan Detail
| • | Loan originations were $195.8 million during the quarter, primarily in our recreation and home improvement segments. |
| • | During the third quarter, net charge-offs remained at near all-time lows and were a net benefit of $0.8 million. |
| • | Loans 90 days or more past due were 0.29% of loans at September 30, 2021; as compared to 0.22% at June 30, 2021; and 0.57% at December 31, 2020. |
Business Segment Highlights
Consumer Lending Segments
| • | We originated $187.1 million of new loans during the 2021 third quarter. |
| • | Our net consumer loan portfolio was $1.3 billion as of quarter-end, compared to $1.1 billion a year ago. |
| • | Our net consumer loan portfolio was 94% of total net loans receivable as of quarter end. |
| • | Net loan portfolio grew 16% for recreation and 26% for home improvement from September 30, 2020. |
| • | Net interest income grew 15% to $35.9 million for the quarter, compared to $31.0 million in the prior year quarter. |
| • | The average interest rate on the portfolio was 12.82% at quarter-end, compared to 13.87% a year ago. |
| • | Consumer loans 90 days or more past due were $3.2 million, or 0.25% of gross consumer loans as of September 30, 2021, compared to $4.2 million, or 0.38%, a year ago. Delinquencies continued to be lower than historical averages. |
| • | Net income for the third quarter was $16.6 million, compared to $13.8 million in the prior year quarter. |
Commercial Lending Segment
| • | We originated $5.7 million of new loans during the 2021 third quarter, as compared to $0.9 million in the prior year quarter. |
| • | The Company’s net commercial loan portfolio was $70.2 million at quarter-end, compared to $68.0 million a year ago. |
| • | The average interest rate on the portfolio was 12.66%, compared to 13.11% a year ago. |
| • | Net income for the third quarter was $1.5 million, compared to $0.3 million in the prior year quarter. |
Medallion Lending Segment
| • | During the quarter, the Company collected $7.6 million on its medallion portfolio. |
| • | Total net medallion exposure declined to $47.3 million (which is comprised of $5.5 million of net loans and $41.8 million of loan collateral in process of foreclosure), less than 3% of total assets, as of September 30, 2021. |
| • | Net income for the third quarter was $1.5 million, compared to a $35.9 million net loss in the 2020 quarter. |
Other Financial Information
| • | The Company continues to evaluate and make progress on strategic alternatives for some of its non-core assets. |
| • | The Company recognized a gain of $2.7 million in connection with a partial sale of a non-core investment, a fintech company the Company invested in 2016. |
| • | Total assets were $1.8 billion as of September 30, 2021, compared to $1.7 billion as of June 30, 2021, and $1.6 billion as of September 30, 2020. |
Retirement of Long-Time Chief Financial Officer
The Company also announced that after a 45-year career in finance, Larry Hall, CFO of Medallion, has decided to retire. Mr. Hall has had a distinguished 21-year career with Medallion, the past 17 years as CFO. As part of the Company’s succession plan, the Company has promoted Anthony Cutrone to Executive Vice President and Chief Financial Officer. Mr. Cutrone has spent approximately 14 years with Medallion and has held various positions within the accounting and finance function, most recently as Director of Finance. This change is effective January 1, 2022. Mr. Hall will continue to serve as CFO until that time in order to assist the executive team and Mr. Cutrone with the transition.
“On behalf of the entire Board of Directors and the entire Medallion Team, I want to thank Larry for his many contributions to Medallion. During his tenure, we have achieved many impressive financial milestones, implemented our control and reporting structure, and positioned the Company well to continue to execute its current growth strategy. He has been a true partner to me and was instrumental to our success in overcoming challenges to our business as we navigated through several business cycles during his time. We wish Larry well on a very well-deserved retirement,” stated Alvin Murstein, Chairman and CEO of Medallion.
“It has been a pleasure to help Medallion evolve into the leading financial services company it has become. I am particularly proud of our recent performance, which culminated with the record results this quarter. The Company is ready for the next phases of growth. I appreciate all of the strong relationships I have been fortunate to build and maintain over the course of my career. I look forward to the next chapter of my life and spending time with my family,” stated Larry Hall.
Anthony Cutrone concluded, “I am excited for the opportunity to serve as the next chief financial officer of Medallion. Medallion is a great company in the midst of exciting growth. I have been fortunate to have had Larry as my colleague throughout my tenure at Medallion. I greatly appreciate the board of directors, the executive team and the greater Medallion team for their collective trust in giving me this opportunity.”
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Conference Call Information
The Company will host a conference call to discuss its third quarter financial results on Tuesday, November 2, 2021, at 9:00 a.m. Eastern time.
| • | Conference Call Dial-In: (877) 407-0789 (toll-free) or (201) 689-8562 (direct). Please dial the number 10 minutes prior to the scheduled start time. |
| • | Live Webcast: available on Medallion’s website at http://www.medallion.com/investors.html |
| • | Call Replay: available following the end of the call through Tuesday, November 9, 2021, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (direct), passcode 137223942. |
| • | Webcast Replay: available at http://www.medallion.com/investors.html until the next quarter’s results are announced. |
* * *
About Medallion Financial Corp.
Medallion Financial Corp., primarily through its wholly-owned subsidiary Medallion Bank, is a finance company that originates and services consumer loans and loans in various commercial industries. Medallion Financial Corp. has lent more than $9 billion since its initial public offering in 1996. For more information, please visit www.medallion.com.
Forward-Looking Statements
Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, net interest income and expenses, other expenses, earnings, growth, and our growth strategy. These statements are often, but not always, made using words or phrases such as “will” and “continue” 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, expectations regarding medallion loan portfolio, the potential for future asset growth and market share opportunities. Medallion’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’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’s control, the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Medallion, its customers and third parties. In addition to risks related to the ongoing COVID-19 pandemic, for a description of certain risks to which Medallion is or may be subject, including risks related to the ongoing SEC investigation, please refer to the factors discussed under the heading “Risk Factors” in Medallion’s 2020 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarterly period ended June 30. 2021.
Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com
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MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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| (Dollars in thousands, except shares and per share data) |
2021 | 2020 | 2021 | 2020 | ||||||||||||
| Total interest income |
$ | 41,497 | $ | 37,440 | $ | 115,953 | $ | 108,570 | ||||||||
| Total interest expense |
7,426 | 8,384 | 23,718 | 26,219 | ||||||||||||
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| Net interest income |
34,071 | 29,056 | 92,235 | 82,351 | ||||||||||||
| Provision (benefit) for loan losses |
(337 | ) | 39,749 | 2,000 | 73,231 | |||||||||||
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| Net interest income after provision for loan losses |
34,408 | (10,693 | ) | 90,235 | 9,120 | |||||||||||
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| Other income (loss) |
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| Change in collateral on loans in process of foreclosure |
(438 | ) | (8,559 | ) | (5,385 | ) | (15,828 | ) | ||||||||
| Sponsorship and race winnings |
3,335 | 8,962 | 10,153 | 15,161 | ||||||||||||
| Gain on the extinguishment of debt |
— | 23 | 4,626 | 23 | ||||||||||||
| Gain (Impairment) on equity investments |
4,101 | 137 | 7,306 | (3,423 | ) | |||||||||||
| Other income (loss) |
208 | 397 | 209 | 1,303 | ||||||||||||
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| Total other income (loss) |
7,206 | 960 | 16,909 | (2,764 | ) | |||||||||||
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| Other expenses |
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| Salaries and employee benefits |
7,957 | 7,081 | 21,542 | 20,716 | ||||||||||||
| Race team related expenses |
2,424 | 2,636 | 7,219 | 6,584 | ||||||||||||
| Loan servicing fees |
1,684 | 1,729 | 5,062 | 5,070 | ||||||||||||
| Collection costs |
1,136 | 1,516 | 4,010 | 4,206 | ||||||||||||
| Professional fees |
1,963 | 1,651 | 4,694 | 6,559 | ||||||||||||
| Other expenses |
3,559 | 4,068 | 10,658 | 11,003 | ||||||||||||
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| Total other expenses |
18,723 | 18,681 | 53,185 | 54,138 | ||||||||||||
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| Income (loss) before income taxes |
22,891 | (28,414 | ) | 53,959 | (47,782 | ) | ||||||||||
| Income tax (provision) benefit |
(6,167 | ) | 8,381 | (16,573 | ) | 12,483 | ||||||||||
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| Net income (loss) after taxes |
16,724 | (20,033 | ) | 37,386 | (35,299 | ) | ||||||||||
| Less: income attributable to the non-controlling interest |
784 | 3,597 | 2,748 | 5,951 | ||||||||||||
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| Total net income (loss) attributable to Medallion Financial Corp. |
$ | 15,940 | $ | (23,630 | ) | $ | 34,638 | $ | (41,250 | ) | ||||||
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| Basic net income (loss) per share |
$ | 0.65 | $ | (0.97 | ) | $ | 1.41 | $ | (1.69 | ) | ||||||
| Diluted net income (loss) per share |
0.64 | (0.97 | ) | 1.39 | (1.69 | ) | ||||||||||
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| Weighted average common shares outstanding |
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| Basic |
24,634,845 | 24,461,488 | 24,583,573 | 24,440,067 | ||||||||||||
| Diluted |
24,990,226 | 24,461,488 | 24,945,707 | 24,440,067 | ||||||||||||
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MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
| (Dollars in thousands, except shares and per share data) |
September 30, 2021 |
December 31, 2020 |
September 30, 2020 |
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| Assets |
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| Cash and federal funds sold |
$ | 85,374 | $ | 112,040 | $ | 49,731 | ||||||
| Equity investments and investment securities |
57,725 | 56,538 | 56,275 | |||||||||
| Loans |
1,419,681 | 1,229,838 | 1,281,054 | |||||||||
| Allowance for loan losses |
(47,448 | ) | (57,548 | ) | (90,510 | ) | ||||||
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| Net loans receivable |
1,372,233 | 1,172,290 | 1,190,544 | |||||||||
| Loan collateral in process of foreclosure |
42,544 | 54,560 | 48,742 | |||||||||
| Goodwill and intangible assets |
200,810 | 201,893 | 202,255 | |||||||||
| Other assets |
46,548 | 45,090 | 56,728 | |||||||||
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| Total assets |
$ | 1,805,234 | $ | 1,642,411 | $ | 1,604,275 | ||||||
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| Liabilities |
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| Accounts payable, accrued expenses, and accrued interest payable |
$ | 26,153 | $ | 19,575 | $ | 29,519 | ||||||
| Deposits |
1,196,508 | 1,065,398 | 1,057,499 | |||||||||
| Short-term borrowings |
8,054 | 87,334 | 87,696 | |||||||||
| Deferred tax liabilities and other tax payables |
12,703 | 807 | 0 | |||||||||
| Operating lease liabilities |
9,346 | 11,018 | 11,159 | |||||||||
| Long-term debt |
213,858 | 153,718 | 121,195 | |||||||||
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| Total liabilities |
1,466,622 | 1,337,850 | 1,307,068 | |||||||||
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| Commitments and contingencies |
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| Total stockholders’ equity |
267,244 | 231,408 | 224,467 | |||||||||
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| Non-controlling interests in consolidated subsidiaries |
71,368 | 73,153 | 72,740 | |||||||||
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| Total equity |
338,612 | 304,561 | 297,207 | |||||||||
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| Total liabilities and equity |
$ | 1,805,234 | $ | 1,642,411 | $ | 1,604,275 | ||||||
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| Number of shares outstanding |
25,082,161 | 24,877,628 | 24,814,103 | |||||||||
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| Book value per share |
$ | 10.65 | $ | 9.30 | $ | 9.05 | ||||||
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