Medallion Financial’s Initiatives For Stability and Growth In Second Half of 2016

Medallion Financial Corp. (Nasdaq:MFIN), a specialty finance company that originates and services loans in various commercial industries, has taken three initiatives which it believes will benefit its financing and diversified loan structure in the second half of 2016.. • The sale of nearly $100-million in prime-credit consumer loans last week by Medallion Bank, MFIN’s unconsolidated wholly-owned portfolio company, to a large super regional bank at a premium

Medallion Bank’s loan sales will help fund MFIN’s fast-paced pipeline of new consumer loans while eliminating any potential loss exposure. In 2015, MFIN reported record earnings of $29,376,000, an all-time high, 80% of which came from consumer lending. Alex Twerdahl, managing director of Sandler O’Neill + Partners, expects MFIN to continue focusing on growing the consumer business “as a more attractive use of capital relative to other lines of business. Consumer loans grew by over 30% in 2015 and about 4% in 1Q16,” noted Twerdahl in his quarterly report dated May 11, 2016. “We are modeling growth to be about 20% in 2016 with an increase in originations in the warmer months.” (Recreational vehicles and boats comprise a significant portion of the MFIN consumer portfolio.)

• An amendment in June between Taxi Medallion Loan Trust III, an indirect wholly-owned subsidiary of MFIN, and Autobahn Funding Company and DZ Bank, credit facilities of MFIN, to improve the Trust’s flexibility and freeze further advances.

Taxi Medallion Loan Trust III provides most of MFIN’s “revolver debt” funding. The Trust has been structured so that MFIN has no revolver debt exposure.

• Decision to freeze the size of its taxi medallion loan portfolio as MFIN continues to diversify its portfolio and to expand in other areas of lending such as consumer loans which are significantly more profitable.

In his same report, Twerdahl noted “that the company’s medallion portfolio is roughly as large today as it was at the end of 2010…..the fact that MFIN’s book did not grow suggests that the company was not aggressively chasing after paper into the medallion price peak in mid-2013.” MFIN reported earnings of $6,848,000 or $0.28 per diluted common share in the first quarter of this year. Managed assets in the first quarter were $1.698 billion, including $1.01 billion at Medallion Bank, both all-time highs.

Submitted July 20, 2016 at 04:09PM by skateboardslider http://ift.tt/29ZSen7