Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2018

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Summary of Inclusive Capitalized Loans

The following table shows the major classification of loans, inclusive of capitalized loan origination costs, at September 30, 2018 under Bank Holding Company Accounting.

(Dollars in thousands)	Amount			As a Percent of Gross Loans
Recreation	$	575,875			53	%
Home improvement		169,642			16
Commercial		82,558			7
Medallion		261,470			24
Total gross loans		1,089,545			100	%
Allowance for loan losses		(29,484	)
Total net loans	$	1,060,061

Summary of Activity in Allowance for Loan Losses

The following table sets forth the activity in the allowance for loan losses for the three and six months ended September 30, 2018 under Bank Holding Company Accounting.

(Dollars in thousands)	Three Months Ended September 30, 2018			Six Months Ended September 30, 2018
Allowance for loan losses – beginning balance(1)	$	21,425		$	—
Charge-offs
Recreation		(4,825	)		(9,471	)
Home improvement		(659	)		(1,220	)
Commercial		—			—
Medallion		(6,457	)		(12,737	)
Total charge-offs		(11,941	)		(23,428	)
Recoveries
Recreation		1,318			3,217
Home improvement		367			606
Commercial		—			4
Medallion		110			304
Total recoveries		1,795			4,131
Net charge-offs		(10,146	)		(19,297	)
Provision for loan losses		18,205			48,781
Allowance for loan losses – ending balance(2)	$	29,484		$	29,484

(1) Beginning balance for the six months ended September 30, 2018 reflects the transition to Bank Holding Company Accounting by netting previously established unrealized depreciation against the gross loan balances resulting in a starting point of zero for this table.

(2) Includes $15,587 of a general reserve for current and performing medallion loans under 90 days past due, as an additional buffer against future losses, representing 53% of the total allowance, and 7% of the loans in question.

Summary of Composition of Allowance for Loan Losses by Type of Loan

The following table sets forth the composition of the allowance for loan losses by type as of September 30, 2018:

	Amount		Percentage of Allowance			Allowance as a Percent of Loan Category
Recreation	$	2,880		10	%		0.50	%
Home Improvement		861		3			0.51
Commercial		100		—			0.12
Medallion		25,643		87			9.81
Total	$	29,484		100	%		2.71	%

Summary of Total Nonaccrual Loans and Foregone Interest

The following table presents total nonaccrual loans and foregone interest, substantially all of which is in the medallion portfolio. The decline reflects the charge-offs of certain loans and their movement to loan collateral in process of foreclosure. The fluctuation in nonaccrual interest foregone is due to past due loans and market conditions.

	Bank Holding Company Accounting						Investment Company Accounting
(Dollars in thousands)	September 30, 2018			June 30, 2018			December 31, 2017 (1)			September 30, 2017 (2)
Total nonaccrual loans	$	45,765		$	47,904		$	98,494		$	132,316
Interest foregone quarter to date		563			770			823			1,845
Amount of foregone interest applied to principal in the quarter		350			400			52			574
Interest foregone life to date		8,530			8,281			12,485			16,286
Amount of foregone interest applied to principal life to date		3,412			3,748			3,495			9,750
Percentage of nonaccrual loans to gross loan portfolio		4	%		4	%		31	%		36	%

(1) Does not include Medallion Bank nonaccrual loans of $32,668, $1,487 of interest income foregone and $1,221 of foregone interest paid and applied to principal.

(2) Does not include Medallion Bank nonaccrual loans of $39,626, $1,278 of interest income foregone and $1,102 of foregone interest paid and applied to principal.

Summary of Performance Status of Loan

The following presents our performance status of loans as of September 30, 2018 under Bank Holding Company Accounting.

(Dollars in  thousands)	Performing		Non-Performing		Total
Recreation	$	570,800	$	5,075	$	575,875
Home improvement		169,475		167		169,642
Commercial		77,155		5,403		82,558
Medallion		223,413		38,057		261,470
Total	$	1,040,843	$	48,702	$	1,089,545

Summary of Attributes of Nonperforming Loan Portfolio

The following table provides additional information on attributes of the nonperforming loan portfolio as of September 30, 2018 under Bank Holding Company Accounting, all of which had an allowance recorded against the principal balance.

	September 30, 2018						Three Months Ended September 30, 2018					Six Months Ended September 30, 2018
(Dollars in  thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized			Average Recorded Investment		Interest Income Recognized
With an allowance recorded
Recreation	$	5,075	$	5,075	$	180	$	5,494	$	106		$	4,496	$	231
Home improvement		167		167		3		178		—			119		—
Commercial		5,403		5,814		100		7,047		(82	)		5,838		(12	)
Medallion		38,057		39,038		10,085		55,065		101			54,917		215
Total nonperforming loans with an allowance	$	48,702	$	50,094	$	10,368	$	67,784	$	125		$	65,370	$	434

The following table provides additional information on attributes of the nonperforming loan portfolio as of December 31, 2017 and September 30, 2017.

(Dollars in  thousands)	Recorded Investment (1) (2)		Unpaid Principal Balance		Average Recorded Investment
December 31, 2017
Medallion(3)	$	79,871	$	82,612	$	128,671
Commercial(3)		18,623		20,491		18,792
September 30, 2017
Medallion(3)	$	120,716	$	123,199	$	124,944
Commercial(3)		11,600		18,867		11,951

(1) As of December 31, 2017 and September 30, 2017, $20,851 and $55,871 of unrealized depreciation was recorded as a valuation allowance on these loans.

(2) Interest income of $124 and $1,383 was recognized on loans for the three and nine months ended September 30, 2017.

(3) Included in the unpaid principal balance is unearned paid-in-kind interest on nonaccrual loans of $4,609 and $9,750 as of December 31, 2017 and September 30, 2017, which is included in the nonaccrual disclosures on page 25.

Summary of Aging of Loans

The following tables show the aging of all loans as of September 30, 2018 and December 31, 2017:

Bank Holding Company Accounting	Days Past Due												Recorded Investment > 90 Days and Accruing
September 30, 2018 (Dollars in thousands)	31-60		61-90		91 +		Total		Current		Total (1)
Recreation	$	14,974	$	4,095	$	3,164	$	22,233	$	534,065	$	556,298	$	—
Home improvement		782		212		175		1,169		170,825		171,994		—
Commercial		471		95		421		987		81,571		82,558		—
Medallion		11,012		4,993		10,301		26,306		227,187		253,493		—
Total	$	27,239	$	9,395	$	14,061	$	50,695	$	1,013,648	$	1,064,343	$	—

(1) Excludes loan premiums of $10,606 resulting from purchase price accounting and $14,596 of capitalized loan origination costs.

Investment Company Accounting	Days Past Due												Recorded Investment > 90 Days and Accruing
December 31, 2017 (Dollars in thousands)	31-60		61-90		91 +		Total		Current		Total
Medallion loans	$	16,049	$	12,387	$	59,701	$	88,137	$	140,279	$	228,416	$	265
Commercial loans
Secured mezzanine		—		—		—		—		88,334		88,334		—
Other secured commercial		—		—		749		749		1,728		2,477		—
Total commercial loans		—		—		749		749		90,062		90,811		—
Total	$	16,049	$	12,387	$	60,450	$	88,886	$	230,341	$	319,227	$	265

Summary of Troubled Debt Restructurings

The following table shows the troubled debt restructurings which the Company entered into during the three months ended September 30, 2018 under Bank Holding Company Accounting.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		10	$	4,810	$	4,810

The following table shows the troubled debt restructurings which the Company entered into during the nine months ended September 30, 2018 under a combined accounting approach.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		17	$	7,505	$	7,505

During the twelve months ended September 30, 2018, three loans modified as troubled debt restructurings were in default and had an investment value of $1,305,000 as of September 30, 2018, net of $773,000 of an allowance for loan loss under Bank Holding Company Accounting.

The following table shows troubled debt restructurings which the Company entered into during the quarter ended September 30, 2017 under Investment Company Accounting.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		7	$	2,994	$	2,994

The following table shows troubled debt restructurings which the Company entered into during the nine months ended September 30, 2017 under Investment Company Accounting.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		54	$	34,905	$	34,831
Commercial loans		2		6,547		6,547
Total		56	$	41,452	$	41,378