8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) August 1, 2013

MEDALLION FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation)

814-00188	04-3291176
(Commission File Number)	(IRS Employer Identification Number)

437 Madison Avenue

New York, New York 10022

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (212) 328-2100

(Former Name or Former Address, if Changed Since Last Report)

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 (see General Instruction A.2. below):

¨ 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))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On July 29, 2013, the Small Business Administration (the “SBA”) committed to reserve leverage in the form of debentures in an amount equal to $8.0 million (the “Commitment”) to Freshstart Venture Capital Corp. (“Freshstart”), a wholly-owned subsidiary of Medallion Financial Corp. Freshstart accepted the Commitment on August 1, 2013 and paid to the SBA a leverage fee in the amount of $80,000.00. The remaining portion of the leverage fee in the amount of $160,000.00 will be deducted pro rata as Freshstart draws from the Commitment proceeds. Freshstart can draw from the Commitment proceeds, in whole or in part, until September 30, 2017, the Commitment’s expiration date.

The foregoing description of the Commitment is qualified in its entirety by reference to the Commitment, which is attached as an exhibit hereto and is incorporated herein by reference in its entirety.

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 June 30, 2013.

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 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
10.1	Commitment Letter, dated July 29, 2013, by the Small Business Administration to Freshstart Venture Capital Corp., accepted and agreed to by Freshstart Venture Capital Corp. on August 1, 2013.
99.1	Press release, dated August 5, 2013.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MEDALLION FINANCIAL CORP.
By:	/s/ Larry D. Hall
	Name:	Larry D. Hall
	Title:	Chief Financial Officer
Date: August 5, 2013

3

Exhibit Index

Exhibit No.	Description
10.1	Commitment Letter, dated July 29, 2013, by the Small Business Administration to Freshstart Venture Capital Corp., accepted and agreed to by Freshstart Venture Capital Corp. on August 1, 2013.
99.1	Press release, dated August 5, 2013.

4

EX-10.1

Exhibit 10.1

U.S. SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C. 20416

COMMITMENT LETTER

JUL 29 2013 License No. 02/02-5447

Mr. Alvin Murstein

Freshstart Venture Capital Corporation

437 Madison Avenue

New York, NY 10022

Dear Mr. Murstein:

The Small Business Administration (“SBA”) is hereby committing to reserve Leverage (as defined in Title 13 of the Code of Federal Regulations (“13 CFR”) 107.50) in the form of guaranteed Debentures in an amount equal to $8,000,000.00, to be issued by Freshstart Venture Capital Corporation (the “Company”) on or prior to September 30, 2017, subject to the terms and conditions set forth in this Commitment Letter and in 13 CFR 107.1200-1240. As used herein, terms which are defined in 13 CFR Part 107 shall have the meanings assigned to them therein.

SBA may limit the amounts that may be drawn each year under this Commitment Letter. Each issuance of Leverage under this Commitment Letter is conditioned upon the Company’s creditworthiness (as determined by SBA) and the Company’s full compliance (as determined by SBA) with each of the other terms and conditions set forth in 13 CFR 107.1200-1240.

This Commitment Letter shall terminate automatically at 5:00 P.M. Eastern Time on September 30, 2017. You must pay to SBA a non-refundable leverage fee in the amount of $80,000.00 within thirty days of the date of this letter or prior to your first draw against this commitment, whichever occurs earlier. The remaining portion of the leverage fee, in the amount of $160,000.00, will be deducted pro-rata as commitment proceeds are drawn.

By its acceptance of this Commitment Letter, the Company agrees to pay, indemnify and hold SBA harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to or arising out of this Commitment Letter.

This Commitment Letter is subject to the provisions of Part 107 of Title 13 of the Code of Federal Regulations, including without limitation 13 CFR 107.1200-1240, which are incorporated herein by reference.

This Commitment Letter has been issued in reliance upon the written representations and certifications made by the Company to SBA in connection with its application for a commitment. This Commitment Letter shall be governed by, and construed in accordance with, federal law.

Two originals of this Commitment Letter are provided so that one may be retained by the Company and the other returned to this Office, Attention: Andrew Hogue.

U.S. Small Business Administration
By:
	Pravina Raghavan
	Acting Associate Administrator for Investment

Agreed and Accepted:
Freshstart Venture Capital Corporation
By:
Date:	8/1/13

EX-99.1

Exhibit 99.1

FOR FURTHER INFORMATION:

AT THE COMPANY:	AT ZLOKOWER COMPANY
Medallion Financial Corp.	Public Relations
437 Madison Avenue	Harry Zlokower/Dave Closs
New York, New York 10022	1-212-447-9292
Andrew M. Murstein, President
Larry D. Hall, CFO
1-212-328-2100
1-877-MEDALLION

FOR IMMEDIATE RELEASE:

MEDALLION FINANCIAL CORP. REPORTS

2013 SECOND QUARTER RESULTS

• Second quarter earnings of $6,249,000, or $0.28 per diluted common share, increased 6% from the 2012 second quarter

• Managed assets were $1.256 billion, an all time high, including $767 million at Medallion Bank

• No taxi medallion loan was more than 90 days past due

• Net interest margin was 6.29% on a combined basis

• New NYC medallion auction anticipated in the 4^th quarter of this year

• Quarterly dividend of $0.22 per share declared

NEW YORK, NY – August 5, 2013 – Medallion Financial Corp. (Nasdaq: TAXI), a specialty finance company with a leading position servicing the taxicab industry and other niche markets, announced that earnings, or net increase in net assets resulting from operations were $6,249,000 or $0.28 per diluted common share in the 2013 second quarter, compared to $5,917,000 or $0.30 per diluted common share in the 2012 second quarter, an increase of $332,000 or 6%. For the six months, earnings, or net increase in net assets resulting from operations were $12,721,000 or $0.58 per diluted common share, compared with $11,382,000 or $0.61 in the same 2012 period, an increase of $1,339,000 or 12%.

(more)

Medallion Financial Announces 2013 Second Quarter Results p. 2

Medallion Financial’s net interest margin was 4.76% for the 2013 second quarter, compared to 4.77% in the second quarter of 2012, primarily reflecting our reduced cost of funds from funding sources that have been favorably repriced. For the first six months, Medallion’s net interest margin was 5.13%, compared with 4.47% in the 2012 period.

On a combined basis with Medallion Bank, the net interest margin was 6.29% in the quarter, compared to 6.32% a year ago, reflecting the continued low cost of funds at the Bank, and the Bank’s higher-yielding loan portfolio. Net interest margin was 6.32% and 6.18% on a combined basis with the Bank for the comparable six month periods.

Net investment income after taxes in the 2013 second quarter was $1,742,000 or $0.08 per share , down $51,000 or 3%, from the $1,793,000 or $0.09 per share posted in the 2012 second quarter. Net investment income after income taxes was $4,205,000 or $0.19 in 2013’s first six months, up $802,000 or 24% from $3,403,000 or $0.18 in the 2012 six month period.

Andrew Murstein, President of Medallion Financial stated, “We are extremely pleased with the 2013 second quarter and year-to-date results, which were among the highest in the Company’s history. Also, we are pleased to announce that we will again be paying a dividend of $0.22 per share, the highest it has been in 12 years. Over the last 10 years we have given our shareholders an annual return including dividends of approximately 25% per year. We are proud to have performed so well, and we feel confident in our future.

“With the apparent resolution of the new medallion auction litigation in New York City, we are looking forward to opportunities to invest in and lend to purchasers of the 2,000 medallions expected to be issued over time, including as many as 400 before the end of this year ,” said Mr. Murstein. “The taxi industry remains extremely strong in New York and in all of the markets we service as does our medallion loan portfolio which has a loan-to-value ratio under 40%.

“We have always done extremely well at new medallion auctions, and while there can be no guarantee, we anticipate many new business opportunities again this time around. As has been the case over the last 80 years, Medallion Financial is in the taxi business to stay and we are focused on being the market leader.”

Larry D. Hall, Chief Financial Officer of Medallion Financial, stated, “All the important indicators of our business continue to demonstrate the quality of Medallion’s operations, including continued growth and profitability, solid credit performance by the portfolio, strong capital levels, abundant liquidity, and an experienced management team.

“On a combined basis with Medallion Bank, loans 90 days or more past due remain at exceptionally low levels, only 0.4%, compared to the same 0.4% at year end, and to 1.1% a year ago. Medallion’s capital and liquidity levels remained strong with deposit-raising capacity at Medallion Bank and capacity in the Company’s other funding sources. Medallion’s debt to equity ratio was only 1.53 to 1, providing plenty of room for increasing our leverage and growing our businesses down the road.

“We have continued to replace higher cost borrowings with lower cost fixed and floating rate debt, further enhancing our profitability and lowering our cost of borrowed funds by 83 basis points from the year ago quarter” said Mr. Hall. “We see additional opportunities to continue this as rates remain near historic lows.

“We have about $38,000,000 of SBA debentures which carry higher than market rates, and can likely be refinanced to current lower levels, subject to SBA approval, which if it occurs, should be accretive to subsequent earnings.”

Medallion Financial’s on-balance sheet taxicab medallion loan portfolio was $294,000,000 at quarter end, up from $278,000,000 a year ago. Total managed medallion loans decreased $11,000,000 or 2% to $662,000,000 at quarter end, down from $673,000,000 a year ago, primarily reflecting loan pay downs.

Medallion Financial’s on-balance sheet commercial loan portfolio was $59,000,000 at quarter end, up $5,000,000 or 9% from $54,000,000 a year ago, primarily reflecting growth in the commercial secured and high-yield mezzanine loan portfolios. The managed commercial loan portfolio was $109,000,000 at quarter end, down $6,000,000 or 5% from $115,000,000 last year, primarily reflecting decreases and reserve increases in the asset-based loan portfolio at Medallion Bank.

(more)

Medallion Financial Announces 2013 Second Quarter Results p. 3

Medallion Bank’s consumer loan portfolio increased $80,000,000 or 36% to $307,000,000 at quarter end from $227,000,000 a year ago. Overall total managed assets increased $96,000,000 or 8% to $1,256,000,000 at quarter end, up from $1,160,000,000 a year ago.

The Company also announced a dividend of $0.22 per share for the 2013 second quarter, up from $0.21 per share in the 2012 second quarter. This brings the total dividends paid over the last four quarters to $0.87, up 7% from $0.81 in the prior four quarters, and equates to a yield of 6% based on the closing price of the Company’s stock on July 31, 2013. The current dividend will be paid on August 23, 2013 to shareholders of record on August 16, 2013. Since the Company’s initial public offering in 1996, the Company has paid in excess of $195,000,000 or $11.89 per share in dividends.

*        *        *

Medallion Financial Corp. is a specialty finance company with a leading position in the origination and servicing of loans financing the purchase of taxicab medallions and related assets. The Company also originates and services loans in other commercial industries, and its wholly-owned portfolio company. Medallion Bank also originates and services consumer loans. The Company and its subsidiaries have lent approximately $5 billion to the taxicab industry and other small businesses.

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. Medallion’s actual results may differ significantly from the results discussed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those factors discussed under the heading “Risk Factors,” in Medallion’s 2012 Annual Report on Form 10-K.

MEDALLION FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except per share data)	2013		2012		2013		2012
Total investment income	$	7,543	$	8,064	$	15,789	$	15,927
Total interest expense		2,121		2,908		4,187		6,155
Net interest income		5,422		5,156		11,602		9,772
Total noninterest income		327		342		623		677
Salaries and benefits		2,345		2,287		4,896		4,337
Professional fees		897		437		1,397		749
Occupancy expense		191		209		391		421
Other operating expenses		574		772		1,336		1,539
Total operating expenses		4,007		3,705		8,020		7,046
Net investment income before income taxes		1,742		1,793		4,205		3,403
Income tax (provision) benefit		—		—		—		—
Net investment income after income taxes		1,742		1,793		4,205		3,403
Net realized gains on investments		4		323		81		265
Net change in unrealized appreciation on investments		3,565		1,834		6,529		3,847
Net change in unrealized appreciation on Medallion Bank and other controlled subsidiaries		938		1,967		1,906		3,867
Net unrealized appreciation on investments		4,503		3,801		8,435		7,714
Net realized/unrealized gains on investments		4,507		4,124		8,516		7,979
Net increase in net assets resulting from operations	$	6,249	$	5,917	$	12,721	$	11,382
Net investment income after income taxes per common share
Basic	$	0.08	$	0.09	$	0.20	$	0.18
Diluted		0.08		0.09		0.19		0.18
Net increase in net assets resulting from operations per common share
Basic	$	0.29	$	0.31	$	0.59	$	0.62
Diluted		0.28		0.30		0.58		0.61
Dividends declared per share	$	0.22	$	0.21	$	0.44	$	0.42
Weighted average common shares outstanding
Basic		21,633,656		19,353,031		21,527,912		18,505,127
Diluted		22,018,060		19,570,383		21,890,556		18,753,671

MEDALLION FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)	June 30, 2013		December 31, 2012
Assets
Medallion loans, at fair value	$	294,029	$	294,388
Commercial loans, at fair value		59,229		56,919
Investment in Medallion Bank and other controlled subsidiaries, at fair value		100,343		99,083
Equity investments, at fair value		6,739		4,620
Investment securities, at fair value		—		—
Net investments		460,340		455,010
Cash and cash equivalents		41,458		26,875
Accrued interest receivable		955		957
Fixed assets, net		595		601
Goodwill, net		5,069		5,069
Other assets, net		63,329		54,953
Total assets	$	571,746	$	543,465
Liabilities
Accounts payable and accrued expenses	$	4,557	$	3,144
Accrued interest payable		1,149		1,233
Funds borrowed		342,698		322,770
Total liabilities		348,404		327,147
Commitments and contingencies		—		—
Total shareholders’ equity (net assets)		223,342		216,318
Total liabilities and shareholders’ equity	$	571,746	$	543,465
Number of common shares outstanding		21,968,483		21,651,204
Net asset value per share	$	10.17	$	9.99
Total managed loans	$	1,078,630	$	1,060,693
Total managed assets		1,255,849		1,219,224