UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): July 30, 2020
MEDALLION FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-37747
(Commission File Number)
04-3291176
(IRS Employer Identification No.)
437 Madison Avenue
New York, New York 10022
(Address of principal executive offices) (Zip code)
(212) 328-2100
(Registrants telephone number, including area code)
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:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share 9.000% Senior Notes due 2021 |
MFIN MFINL |
NASDAQ Global Select Market NASDAQ Global Select Market |
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 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 Banks results for the quarter ended June 30, 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 July 30, 2020 |
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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: July 30, 2020
MEDALLION FINANCIAL CORP. | ||
By: |
/s/ Larry D. Hall | |
Name: Larry D. Hall | ||
Title: Chief Financial Officer |
-3-
Exhibit 99.1
FOR IMMEDIATE RELEASE:
MEDALLION BANK REPORTS 2020 SECOND QUARTER RESULTS AND BOARD
OF DIRECTORS DECLARES SERIES F PREFERRED STOCK DIVIDEND
SALT LAKE CITY, UT July 30, 2020 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 second quarter results. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).
2020 Second Quarter Highlights
| Quarterly net income was $1.8 million, compared to net income of $2.1 million in the prior year period |
| Quarterly net interest income was $28.1 million, compared to $25.4 million in the prior year period |
| Quarterly provision for loan losses was $16.4 million, compared to $14.2 million in the prior year period, while annualized net charge-offs were 1.38% of average loans outstanding, compared to 5.54% in the 2019 quarter, partially reflecting the impact of COVID-related payment deferrals |
| The recreation and home improvement loan portfolios grew 10% and 14% from December 31, 2019 |
| The medallion loan portfolio decreased 4% to $102.9 million compared to $107.7 million at December 31, 2019, or $64.6 million compared to $79.5 million net of allowance for loan losses for the respective periods |
| Total assets were $1.3 billion as of June 30, 2020 |
| The Bank had $223.5 million in capital and a Tier 1 leverage ratio of 16.96% as of June 30, 2020 |
Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, The Banks recreation and home improvement lending segments had record-breaking application volumes this quarter, reflecting increased consumer demand for the products we finance. Like many lenders during the pandemic, we tightened borrower credit criteria in order to improve overall asset quality, but even so, the demand resulted in growth in our consumer portfolios to over $1 billion. With the impact of the pandemic on our borrowers, we added to our loan loss reserves during the quarter and are monitoring loan performance closely. The provision for our medallion loans, most of which are collateralized by New York City medallions, was $7.4 million for the quarter. With our strong capital position, we believe we are well-positioned for the expected bumps in the road ahead. Lastly, I wanted to once again commend our employees for remaining focused and adapting exceptionally well to the current environment.
Recreation Lending Segment
The Banks recreation loan portfolio was $794.4 million as of June 30, 2020, compared to $722.4 million at the end of 2019. Net interest income for the second quarter was $23.8 million, compared to $21.1 million in the prior year period. Recreation loans were 67.2% of the Banks loans receivable as of June 30, 2020, compared to 66.9% at the end of 2019. The provision for recreation loan losses was $8.3 million, compared to $5.9 million in the prior year period. Gross recreation loans that had payment deferrals were $89.3 million, or 11.6%, of which $32.5 million, or 4.2%, remained in a deferral state as of June 30, 2020. Recreation loan delinquencies 90 days or more past due were $3.5 million, or 0.5% of gross recreation loans, as of June 30, 2020, compared to $5.9 million, or 0.8%, at the end of 2019. Delinquencies were lower as a result of the COVID-19 deferrals.
Home Improvement Lending Segment
The Banks home improvement loan portfolio was $282.3 million as of June 30, 2020, compared to $247.6 million at the end of 2019. Net interest income for the second quarter was $5.1 million, compared to $3.7 million in the prior year period. Home improvement loans were 23.9% of the Banks loans receivable as of June 30, 2020, compared to 22.9% at
the end of 2019. The provision for home improvement loan losses was $0.8 million for both the second quarter of 2020 and 2019. Gross home improvement loans that had payment deferrals were $5.2 million, or 1.8%, of which $2.6 million, or 0.9%, remained in a deferral state as of June 30, 2020. Home improvement loan delinquencies 90 days or more past due were $137,000, or 0.05% of gross home improvement loans, as of June 30, 2020, compared to $185,000, or 0.07%, at the end of 2019. Delinquencies were lower as a result of the COVID-19 deferrals.
Medallion Lending Segment
The Banks medallion loan portfolio was $102.9 million as of June 30, 2020, compared to $107.7 million at the end of 2019. Medallion loans were 8.7% of the Banks loans receivable as of June 30, 2020, compared to 10.0% at the end of 2019. The Banks medallion loan portfolio net of allowance for loan losses was $64.6 million as of June 30, 2020, compared to $79.5 million at the end of 2019. The total exposure of the medallion lending segment, which includes loans in process of foreclosure and remarketed assets, was 7.4% of total assets as of June 30, 2020, compared to 9.7% at December 31, 2019. The provision for medallion loan losses was $7.4 million, compared to $7.5 million in the prior year period. Gross medallion loans that had payment deferrals were $90.2 million, or 87% of total gross loans, all of which remained in a deferral state as of June 30, 2020. Medallion loan delinquencies 90 days or more past due were $11.1 million as of June 30, 2020, compared to $0.4 million at the end of 2019, and delinquencies 30 days or more past due were $23.9 million as of June 30, 2020, compared to $10.3 million at the end of 2019.
Unless otherwise specified, loan portfolios are presented net of deferred loan acquisition costs.
* * *
On July 27, 2020, the Banks Board of Directors declared a quarterly cash dividend of $0.50 per share on the Banks 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 October 1, 2020 to holders of record at the close of business on September 15, 2020.
* * *
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. Since its founding in 2003, Medallion Bank has been in the top 2% of banks in the U.S. when measured by Tier 1 leverage ratio and annual return on assets. The Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City with an office in Bothell, Washington. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).
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 believe, 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 liquidation, the potential for future asset growth and market share growth opportunities. Medallion Banks 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 Banks 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 Banks control, including the scope and duration of the pandemic, actions taken by
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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 Banks 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 Banks Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended March 31, 2020, filed with the FDIC. Medallion Banks Form 10-K, Form 10-Qs and other FDIC filings are available in the Investor Relations section of Medallion Banks website.
Company Contact:
Alex E. Arzeno
Investor Relations
212-328-2168
InvestorRelations@medallion.com
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MEDALLION BANK
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Three Months Ended June 30, |
||||||||
(In thousands) |
2020 | 2019 | ||||||
Total interest income |
$ | 33,990 | $ | 30,932 | ||||
Total interest expense |
5,920 | 5,484 | ||||||
|
|
|
|
|||||
Net interest income |
28,070 | 25,448 | ||||||
Provision for loan losses |
16,437 | 14,178 | ||||||
|
|
|
|
|||||
Net interest income after provision for loan losses |
11,633 | 11,270 | ||||||
|
|
|
|
|||||
Other (loss) income |
||||||||
Write-downs of loan collateral in process of foreclosure |
(655 | ) | (680 | ) | ||||
Other non-interest income |
49 | 223 | ||||||
|
|
|
|
|||||
Total non-interest (loss) income, net |
(606 | ) | (457 | ) | ||||
|
|
|
|
|||||
Non-interest expense |
||||||||
Loan servicing |
2,833 | 2,643 | ||||||
Salaries and benefits |
2,552 | 2,151 | ||||||
Collection costs |
1,141 | 1,497 | ||||||
Professional fees |
418 | 367 | ||||||
Regulatory fees |
236 | 464 | ||||||
Occupancy and equipment |
228 | 135 | ||||||
Other |
1,037 | 796 | ||||||
|
|
|
|
|||||
Total non-interest expense |
8,445 | 8,053 | ||||||
|
|
|
|
|||||
Income before income taxes |
2,582 | 2,760 | ||||||
Provision for income taxes |
761 | 691 | ||||||
|
|
|
|
|||||
Net income |
1,821 | 2,069 | ||||||
|
|
|
|
4
MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)
(In thousands) |
June 30, 2020 | December 31, 2019 | ||||||
Assets |
||||||||
Cash and federal funds sold |
$ | 87,872 | $ | 50,237 | ||||
Investment securities, available-for-sale |
47,495 | 48,998 | ||||||
Loans, inclusive of net deferred loan acquisition costs |
1,181,380 | 1,079,553 | ||||||
Allowance for loan losses |
(78,574 | ) | (59,885 | ) | ||||
|
|
|
|
|||||
Loans, net |
1,102,806 | 1,019,668 | ||||||
Loan collateral in process of foreclosure |
24,901 | 30,639 | ||||||
Fixed assets and right-of-use assets, net |
3,631 | 3,852 | ||||||
Deferred tax assets |
15,394 | 11,419 | ||||||
Accrued interest receivable and other assets |
35,460 | 28,417 | ||||||
|
|
|
|
|||||
Total assets |
$ | 1,317,559 | $ | 1,193,230 | ||||
|
|
|
|
|||||
Liabilities and Shareholders Equity |
||||||||
Deposits and other funds borrowed |
$ | 1,075,322 | $ | 951,651 | ||||
Accrued interest payable |
1,734 | 2,096 | ||||||
Income taxes payable |
4,887 | 2,144 | ||||||
Other liabilities |
10,993 | 9,157 | ||||||
Due to affiliates |
1,141 | 1,041 | ||||||
|
|
|
|
|||||
Total liabilities |
1,094,077 | 966,089 | ||||||
|
|
|
|
|||||
Total shareholders equity |
223,482 | 227,141 | ||||||
|
|
|
|
|||||
Total liabilities and shareholders equity |
$ | 1,317,559 | $ | 1,193,230 | ||||
|
|
|
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