Segment Reporting

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Reporting

(9) SEGMENT REPORTING

The Company has five business segments, which include four lending and one non-operating segment, which are reflective of how Company management makes decisions about its business and operations.

The four lending segments reflect the main types of lending performed at the Company, which are recreation, home improvement, commercial, and medallion. The recreation and home improvement lending segments are operated by the Bank and loans are made to borrowers residing nationwide. The highest concentrations of recreation loans are in Texas and Florida at 15% and 10% of loans outstanding and with no other states over 10% as of June 30, 2023. The recreation lending segment is a consumer finance business that works with third-party dealers and financial service providers for the purpose of financing RVs, boats, and other consumer recreational equipment, of which RVs and boats make up 59% and 19% of the segment portfolio, with no other product lines exceeding 10%, as of June 30, 2023. The home improvement lending segment works with contractors and financial service providers to finance residential home improvement with the largest product lines being roofs, swimming pools, and windows at 41%, 19%, and 13% of total home improvement loans outstanding, and with no other product lines exceeding 10% as of June 30, 2023. The highest concentrations of home improvement loans are in Texas and Florida at 10% and 10% of loans outstanding and with no other states over 10% as of June 30, 2023. The commercial lending segment focuses on enterprise-wide industries, including manufacturing services, and various other industries, with California, Minnesota, Illinois, and Texas each having 23%, 15%, 12%, and 11% of the segment portfolio, and no other states having a concentration greater than 10%. The commercial lending business has concentrations in manufacturing, wholesale trade, construction, and administrative and support services making up 48%, 13%, 12%, and 11%, of the loans outstanding as of June 30, 2023, with no other product lines exceeding 10%. The medallion lending segment arose in connection with the financing of taxi medallions, taxis, and related assets, primarily all of which are located in the New York City metropolitan area as of June 30, 2023.

The Company's corporate and other investments segment is a non-operating segment that includes items not allocated to the Company's operating segments such as investment securities, equity investments, intercompany eliminations, and other corporate elements.

As part of segment reporting, capital ratios for all operating segments have been normalized as a percentage of consolidated total equity divided by total assets, with the net adjustment applied to corporate and other investments. In addition, the commercial segment primarily represents the mezzanine lending business, with certain legacy commercial loans (immaterial to total) allocated to corporate and other investments.

The following table presents segment data as of and for the three and six months ended June 30, 2023.

Three Months Ended June 30, 2023	Consumer Lending
(Dollars in thousands)	Recreation			Home Improvement			Commercial Lending			Medallion Lending			Corporate and Other Investments			Consolidated
Total interest income	$	41,109		$	15,292		$	2,814		$	787		$	1,724		$	61,726
Total interest expense		7,580			4,194			852			46			2,363			15,035
Net interest income (loss)		33,529			11,098			1,962			741			(639	)		46,691
Provision (benefit) for credit losses		10,135			3,739			(113	)		(5,311	)		26			8,476
Net interest income (loss) after loss provision		23,394			7,359			2,075			6,052			(665	)		38,215
Other income (expense), net		(8,444	)		(4,386	)		(804	)		561			(3,988	)		(17,061	)
Net income (loss) before taxes		14,950			2,973			1,271			6,613			(4,653	)		21,154
Income tax (provision) benefit		(3,867	)		(769	)		(329	)		(1,713	)		1,206			(5,472	)
Net income (loss) after taxes	$	11,083		$	2,204		$	942		$	4,900		$	(3,447	)	$	15,682
Income attributable to the non-controlling interest																	1,512
Total net income attributable to Medallion Financial Corp.																$	14,170
Balance Sheet Data
Total loans	$	1,331,114		$	728,468		$	92,637		$	3,448		$	1,331		$	2,156,998
Total assets		1,294,925			718,383			99,713			18,724			387,392			2,519,137
Total funds borrowed		1,062,309			589,335			81,801			15,360			317,802			2,066,607
Selected Financial Ratios
Return on average assets		3.59	%		1.28	%		3.76	%		100.63	%		(3.69	)%		2.60	%
Return on average equity		22.94			8.19			23.97			641.63			(22.83	)		16.52
Return on average stockholders' equity	*			*			*			*			*				18.24
Interest yield		13.03			8.79			11.87			83.55		N/A				11.59
Net interest margin, gross		10.63			6.38			8.28			78.67		N/A				8.48
Net interest margin, net of allowance		11.08			6.53			8.54			166.23		N/A				8.77
Reserve coverage		4.07			2.26			2.72			52.76		N/A				3.48
Delinquency status (1)		0.39			0.16			0.08			—		N/A				0.29
Charge-off ratio (2)		1.86			1.12			3.80			(525.21	)	N/A				0.74

(1)Loans 90 days or more past due.

(2)Negative balances indicate net recoveries for the period.

(*) Line item is not applicable to segments.

Six Months Ended June 30, 2023	Consumer Lending
(Dollars in thousands)	Recreation			Home Improvement			Commercial Lending			Medallion Lending			Corporate and Other Investments			Consolidated
Total interest income	$	79,008		$	28,941		$	5,515		$	1,097		$	3,007		$	117,568
Total interest expense		13,484			7,473			1,661			113			4,544			27,275
Net interest income (loss)		65,524			21,468			3,854			984			(1,537	)		90,293
Provision (benefit) for credit losses		17,886			6,820			214			(12,395	)		(11	)		12,514
Net interest income (loss) after loss provision		47,638			14,648			3,640			13,379			(1,526	)		77,779
Other income (expense), net		(16,247	)		(8,379	)		(953	)		153			(7,944	)		(33,370	)
Net income (loss) before taxes		31,391			6,269			2,687			13,532			(9,470	)		44,409
Income tax (provision) benefit		(8,380	)		(1,674	)		(718	)		(3,612	)		2,530			(11,854	)
Net income (loss) after taxes	$	23,011		$	4,595		$	1,969		$	9,920		$	(6,940	)	$	32,555
Income attributable to the non-controlling interest																	3,024
Total net income attributable to Medallion Financial Corp.																$	29,531
Balance Sheet Data
Total loans	$	1,331,114		$	728,468		$	92,637		$	3,448		$	1,331		$	2,156,998
Total assets		1,294,925			718,383			99,713			18,724			387,392			2,519,137
Total funds borrowed		1,062,309			589,335			81,801			15,360			317,802			2,066,607
Selected Financial Ratios
Return on average assets		3.84	%		1.39	%		3.94	%		94.20	%		(3.70	)%		2.79	%
Return on average equity		24.13			8.76			24.74			590.25			(23.24	)		17.49
Return on average stockholders' equity	*			*			*			*			*				19.45
Interest yield		12.93			8.66			11.71			28.80		N/A				11.01
Net interest margin, gross		10.72			6.43			8.18			25.84		N/A				8.45
Net interest margin, net of allowance		11.18			6.57			8.43			73.52		N/A				8.75
Reserve coverage		4.07			2.26			2.72			52.76		N/A				3.48
Delinquency status(1)		0.39			0.16			0.08			—		N/A				0.29
Charge-off ratio(2)		2.57			0.97			1.89			(124.01	)	N/A				1.51

(1)Loans 90 days or more past due.

(2)Negative balances indicate net recoveries for the period.

(*) Line item is not applicable to segments.

The following table presents segment data as of and for the three and six months ended June 30, 2022.

Three Months Ended June 30, 2022	Consumer Lending
(Dollars in thousands)	Recreation			Home Improvement			Commercial Lending			Medallion Lending			Corporate and Other Investments			Consolidated
Total interest income	$	33,514		$	10,587		$	2,278		$	231		$	501		$	47,111
Total interest expense		4,096			1,626			785			140			1,583			8,230
Net interest income (loss)		29,418			8,961			1,493			91			(1,082	)		38,881
Provision (benefit) for credit losses		6,674			1,697			1,879			(2,272	)		(219	)		7,759
Net interest income (loss) after loss provision		22,744			7,264			(386	)		2,363			(863	)		31,122
Other expense, net		(7,551	)		(3,210	)		3,263			(357	)		(3,600	)		(11,455	)
Net income (loss) before taxes		15,193			4,054			2,877			2,006			(4,463	)		19,667
Income tax (provision) benefit		(3,567	)		(975	)		(816	)		(540	)		1,042			(4,856	)
Net income (loss) after taxes	$	11,626		$	3,079		$	2,061		$	1,466		$	(3,421	)	$	14,811
Income attributable to the non-controlling interest																	1,511
Total net income attributable to Medallion Financial Corp.																$	13,300
Balance Sheet Data
Total loans	$	1,096,670		$	526,278		$	96,928		$	14,152		$	593		$	1,734,621
Total assets		1,072,356			521,931			103,643			31,258			382,943			2,112,131
Total funds borrowed		861,083			419,102			83,224			25,100			307,496			1,696,005
Selected Financial Ratios
Return on average assets		4.53	%		2.49	%		8.70	%		17.04	%		(3.56	)%		2.93	%
Return on average equity		25.52			14.03			49.03			95.46			(20.01	)		16.33
Return on average stockholders' equity	*			*			*			*			*				18.11
Interest yield		12.83			8.51			10.41			6.66		N/A				10.64
Net interest margin, gross		11.26			7.20			6.82			2.62		N/A				8.78
Net interest margin, net of allowance		11.65			7.33			6.93			7.88		N/A				9.07
Reserve coverage		3.44			1.75			2.81			66.61		N/A				3.41
Delinquency status (1)		0.36			0.07			0.08			—		N/A				0.25
Charge-off ratio (2)		0.56			0.42			(0.06	)		(77.17	)	N/A				(0.17	)

(1)Loans 90 days or more past due.

(2)Negative balances indicate net recoveries for the period.

(*) Line item is not applicable to segments.

Six Months Ended June 30, 2022	Consumer Lending
(Dollars in thousands)	Recreation			Home Improvement			Commercial Lending			Medallion Lending			Corporate and Other Investments			Consolidated
Total interest income	$	64,650		$	20,288		$	4,208		$	377		$	891		$	90,414
Total interest expense		7,697			2,967			1,507			293			3,141			15,605
Net interest income (loss)		56,953			17,321			2,701			84			(2,250	)		74,809
Provision (benefit) for credit losses		8,354			2,902			3,134			(3,544	)		153			10,999
Net interest income (loss) after loss provision		48,599			14,419			(433	)		3,628			(2,403	)		63,810
Other expense, net		(14,371	)		(6,106	)		1,932			(1,566	)		(7,847	)		(27,958	)
Net income (loss) before taxes		34,228			8,313			1,499			2,062			(10,250	)		35,852
Income tax (provision) benefit		(9,248	)		(2,246	)		(405	)		(557	)		2,769			(9,687	)
Net income (loss) after taxes	$	24,980		$	6,067		$	1,094		$	1,505		$	(7,481	)	$	26,165
Income attributable to the non-controlling interest																	3,024
Total net income attributable to Medallion Financial Corp.																$	23,141
Balance Sheet Data
Total loans	$	1,096,670		$	526,278		$	96,928		$	14,152		$	593		$	1,734,621
Total assets		1,072,356			521,931			103,643			31,258			382,943			2,112,131
Total funds borrowed		861,083			419,102			83,224			25,100			307,496			1,696,005
Selected Financial Ratios
Return on average assets		5.04	%		2.56	%		2.41	%		5.85	%		(4.24	)%		2.68	%
Return on average equity		27.27			13.87			12.20			30.73			(24.86	)		14.57
Return on average stockholders' equity	*			*			*			*			*				15.93
Interest yield		12.85			8.57			10.13			5.47		N/A				10.68
Net interest margin, gross		11.32			7.32			6.50			1.22		N/A				8.84
Net interest margin, net of allowance		11.71			7.45			6.60			3.61		N/A				9.15
Reserve coverage		3.44			1.75			2.81			66.61		N/A				3.41
Delinquency status(1)		0.36			0.07			0.08			—		N/A				0.25
Charge-off ratio(2)		0.60			0.43			3.70			(51.66	)	N/A				0.26

(1)Loans 90 days or more past due.

(2)Negative balances indicate net recoveries for the period.

(*) Line item is not applicable to segments.