8-K

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): October 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

(Registrant’s 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 Bank’s results for the quarter ended September 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 October 30, 2020
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: October 30, 2020

MEDALLION FINANCIAL CORP.
By:	/s/ Larry D. Hall
Name:	Larry D. Hall
Title:	Chief Financial Officer

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE:

MEDALLION BANK REPORTS 2020 THIRD QUARTER RESULTS

AND DECLARES SERIES F PREFERRED STOCK DIVIDEND

SALT LAKE CITY, UT – October 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 third quarter results. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

2020 Third Quarter Highlights

• Quarterly net loss was $13.2 million, compared to net income of $9.3 million in the prior year period.

• Quarterly net interest income was $31.1 million, compared to $27.1 million in the prior year period.

• Because of ongoing weak taxi demand in New York City, the remaining medallion loan portfolio of $79.5 million was deemed impaired, placed on nonaccrual status and adjusted down to collateral value.

• The total exposure of the medallion lending segment, which includes loans in process of foreclosure and remarketed assets, was $57 million, or 4% of total assets, as of September 30, 2020, compared to $116 million, or 10%, at December 31, 2019, and $118 million, or 10%, at September 30, 2019. Of that exposure, the medallion loan portfolio net of the allowance for loan losses was $22 million as of September 30, 2020, compared to $80 million at December 31, 2019 and $84 million at September 30, 2019.

• Quarterly provision for loan losses was $35.3 million, compared to $7.3 million in the prior year period, while annualized net charge-offs were 5.12% of average loans outstanding, compared to 3.21% in the prior year period, reflecting the continued increase in medallion delinquency and the lower value of medallion collateral, partially offset by the successful resolution of most COVID-related payment deferrals in the recreation and home improvement loan portfolios.

• The recreation and home improvement loan portfolios grew 12% and 27%, respectively, from December 31, 2019 and 13% and 37% from September 30, 2019.

• Total assets were $1.3 billion as of September 30, 2020.

• The Bank had $207.2 million in capital and a Tier 1 leverage ratio of 15.47% as of September 30, 2020.

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “Our third quarter numbers are the result of two very different stories playing out in the Bank’s loan portfolios. COVID-related payment deferrals in the recreation and home improvement loan portfolios largely resolved during the quarter, resulting in a combined net income of $16.3 million for those two businesses compared to $11.6 million in the 2019 quarter, and only $5.6 million of loans remained in a deferred state at quarter-end. However, payment deferrals were insufficient to resolve ongoing weakness in the medallion loan portfolio, and we took a large loan loss provision as we deemed the remaining medallion loan portfolio impaired and adjusted it down to collateral value. While we are optimistic about long-term recoveries in the medallion loan portfolio, such recoveries will depend on when and if the taxi industry rebounds in New York City. Looking forward, we believe the Bank is well-positioned to grow its recreation and home improvement lending segments as we complete the liquidation of the medallion loan portfolio.”

Recreation Lending Segment

The Bank’s recreation loan portfolio was $810 million as of September 30, 2020, compared to $722 million at December 31, 2019 and $716 million at September 30, 2019. Net interest income for the third quarter was $25.4 million, compared to $22.5 million in the prior year period. Recreation loans were essentially flat at 67% of loans receivable as of September 30, 2020, December 31, 2019 and September 30, 2019. The provision for recreation loan losses was $1.8 million,

compared to $6.6 million in the prior year period. Gross recreation loans in a payment deferral state were $5.4 million, or 0.7% of the portfolio, as of September 30, 2020. Recreation loan delinquencies 90 days or more past due were $4.1 million, or 0.5% of gross recreation loans, as of September 30, 2020, compared to $5.9 million, or 0.8%, at December 31, 2019 and $4.7 million, or 0.7%, at September 30, 2019. Delinquencies were lower, at least in part, as a result of the COVID-related payment deferrals.

Home Improvement Lending Segment

The Bank’s home improvement loan portfolio was $316 million as of September 30, 2020, compared to $248 million at December 31, 2019 and $231 million at September 30, 2019. Net interest income for the third quarter was $6.2 million, compared to $4.1 million in the prior year period. Home improvement loans were 26% of the Bank’s loans receivable as of September 30, 2020, compared to 23% at December 31, 2019 and 22% at September 30, 2019. The provision for home improvement loan losses was $0.7 million, compared to ($0.7) million in the prior year period. Gross home improvement loans in a payment deferral state were $158,000 as of September 30, 2020. Home improvement loan delinquencies 90 days or more past due were $103,000, or 0.03% of gross home improvement loans as of September 30, 2020, compared to $185,000, or 0.07%, at December 31, 2019 and $243,000, or 0.10%, at September 30, 2019. Delinquencies were lower, at least in part, as a result of the COVID-related payment deferrals.

Medallion Lending Segment

The Bank’s medallion loan portfolio before the allowance for loan losses was $79 million as of September 30, 2020, compared to $108 million at December 31, 2019 and $113 million at September 30, 2019. Medallion loans were 7% of the Bank’s loans receivable as of September 30, 2020, compared to 10% at December 31, 2019 and 11% at September 30, 2019. All medallion loans are on nonaccrual and have been adjusted down to collateral value, net of liquidation costs. The Bank’s medallion loan portfolio net of the allowance for loan losses was $22 million as of September 30, 2020, compared to $80 million at December 31, 2019 and $84 million at September 30, 2019. The total exposure of the medallion lending segment, which includes loans in process of foreclosure and remarketed assets, was $57 million, or 4% of total assets, as of September 30, 2020, compared to $116 million, or 10%, at December 31, 2019 and $118 million, or 10%, at September 30, 2019. The provision for medallion loan losses was $32.7 million, compared to $1.4 million in the prior year period.

Unless otherwise specified, loan portfolios are presented net of deferred loan acquisition costs.

*                *                 *

On October 29, 2020, the Bank’s Board of Directors declared a quarterly cash dividend of $0.50 per share on the Bank’s 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 January 4, 2021 to holders of record at the close of business on December 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. Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City with an office in Bothell, Washington, and is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

For more information, visit www.medallionbank.com

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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,” “optimistic” 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, recoveries in the medallion loan portfolio and the prospects for the taxi industry in New York City, the potential for future asset growth and market share growth opportunities. Medallion Bank’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 Bank’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 Bank’s control, including 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 Bank, its customers and third parties. In addition, Medallion Bank’s 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 Bank’s Form 10-K for the year ended December 31, 2019 and in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, filed with the FDIC. Medallion Bank’s Form 10-K, Form 10-Qs and other FDIC filings are available in the Investor Relations section of Medallion Bank’s website.

Company Contact:

Alex E. Arzeno

Investor Relations

212-328-2168

InvestorRelations@medallion.com

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MEDALLION BANK

STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended September 30,
(In thousands)	2020			2019
Total interest income	$	36,565		$	33,113
Total interest expense		5,454			6,003
Net interest income		31,111			27,110
Provision for loan losses		35,299			7,316
Net interest (loss) income after provision for loan losses		(4,188	)		19,794
Other (loss) income
Write-downs of loan collateral in process of foreclosure		(5,574	)		(18	)
Other non-interest income		109			50
Total non -interest (loss) income		(5,465	)		32
Non -interest expense
Loan servicing		2,831			2,704
Salaries and benefits		2,535			2,295
Collection costs		1,170			1,227
Professional fees		384			288
Regulatory fees		348			268
Occupancy and equipment		234			138
Other		902			999
Total non -interest expense		8,404			7,919
(Loss) income before income taxes		(18,057	)		11,907
(Benefit) provision for income taxes		(4,859	)		2,621
Net (loss) income		(13,198	)		9,286

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MEDALLION BANK

BALANCE SHEETS

(UNAUDITED)

(In thousands)	September 30, 2020			December 31, 2019			September 30, 2019
Assets
Cash and federal funds sold	$	39,884		$	50,237		$	33,405
Investment securities, available-for-sale		45,991			48,998			47,422
Loans, inclusive of net deferred loan acquisition		1,206,780			1,079,553			1,061,713
Allowance for loan losses		(98,446	)		(59,885	)		(58,573	)
Loans, net		1,108,334			1,019,668			1,003,140
Loan collateral in process of foreclosure		25,900			30,639			31,991
Fixed assets and right-of-use assets, net		3,462			3,852			2,593
Deferred tax assets		20,470			11,419			11,222
Accrued interest receivable and other assets		35,904			28,417			29,418
Total assets	$	1,279,945		$	1,193,230		$	1,159,191
Liabilities and Shareholders’ Equity
Deposits and other funds borrowed	$	1,057,499		$	951,651		$	964,231
Accrued interest payable		1,992			2,096			2,391
Income taxes payable		2,948			2,144			2,760
Other liabilities		9,288			9,157			8,908
Due to affiliates		996			1,041			612
Total liabilities		1,072,723			966,089			978,902
Total shareholders’ equity		207,222			227,141			180,289
Total liabilities and shareholders’ equity	$	1,279,945		$	1,193,230		$	1,159,191

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Document and Entity Information	Oct. 30, 2020
Document And Entity Information [Line Items]
Entity Registrant Name	MEDALLION FINANCIAL CORP
Amendment Flag	false
Entity Central Index Key	0001000209
Document Type	8-K
Document Period End Date	Oct. 30, 2020
Entity Incorporation State Country Code	DE
Entity File Number	001-37747
Entity Tax Identification Number	04-3291176
Entity Address, Address Line One	437 Madison Avenue
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10022
City Area Code	(212)
Local Phone Number	328-2100
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