Medallion Financial Corp. Reports 2015 Fourth Quarter and Record Full Year Results

NEW YORK--(BUSINESS WIRE)--

Medallion Financial Corp. TAXI announced that earnings, or net increase in net assets resulting from operations, were $29,376,000 or $1.20 per diluted common share in 2015, up $684,000 or 2% from $28,692,000 or $1.14 per share in 2014, primarily reflecting lower operating expenses and higher net interest income, partially offset by lower net realized/unrealized gains and noninterest income. Net investment income after income taxes was $16,826,000 or $0.69 per share in 2015, up $1,681,000 or 11% from $15,145,000 or $0.60 in 2014.

Medallion Bank, the Company's unconsolidated wholly-owned portfolio company, had net income of $23,238,000 in 2015. Medallion Bank's consumer lending portfolio grew 31% over the last year, all with a decrease in delinquencies from a year ago, and with loss rates remaining at low levels.

Medallion Financial's net interest margin was 4.59% for the 2015 quarter, compared to 6.64% in the 2014 quarter, primarily reflecting lower dividends from Medallion Bank which can elect to retain earnings for growth, and was 6.03% in the full year, compared with 6.54% for 2014, primarily reflecting lower rates earned and changes in the portfolio mix. On a combined basis with Medallion Bank, the net interest margin was 6.95% in the quarter and 6.98% in the full year, compared to 6.86% and 7.09% a year ago, reflecting the continued low cost of funds at the Bank, and the Bank's higher-yielding loan portfolio. The net interest margins demonstrate the strong portfolio earning power of Medallion and the Bank.

Andrew Murstein, President of Medallion Financial stated, "We are extremely pleased with the 2015 fourth quarter and record-setting full year results. While taxi medallion lending continues to have virtually zero losses, the majority of our earnings continue to arise from non-taxi related loan products, primarily from our consumer lending businesses, which was responsible for 80% of our earnings in 2015. We anticipate that this area will contribute to earnings at an increasing rate as we continue to grow these portfolios."

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, very solid credit performance by the portfolios, strong capital levels, and an experienced management team."

"For Medallion Financial, loans 90 days or more past due were 3.6%, compared to 2.1% last quarter. On a combined basis with Medallion Bank, loans 90 days or more past due were 2.2%, compared to 1.5% last quarter," said Mr. Hall. "Medallion loans 90 days or more past due were 3.8% of Medallion Financial's medallion loan portfolio, up from 1.8% last quarter. Medallion loans 90 days or more past due were 4.1% of the combined medallion loan portfolio, up from 2.5% last quarter. These rates are still down from historical levels, such as during the first 10 years of being a public company when delinquencies averaged 3% and rose as high as 7%. The Company still experienced virtually no losses even at those levels and we had virtually no losses on medallion loans during 2015. The current loan to value of our combined taxi medallion portfolio was 76% at year end, compared to 60% a year ago. Additionally, we also have personal guarantees on virtually all of these loans. Medallion Bank had aggregate loan loss reserves of 2.35%, compared to 2.07% last quarter and 1.91% a year ago, and despite these increased reserves we still had record earnings," said Mr. Hall.

"Medallion Financial had realized gains of 1.40% in 2015, compared to realized losses of 1.11% in the year ago period, and Medallion Bank had a net loss rate of 1.06% in 2015, compared to 0.77% in the 2014 period. Additionally, Medallion Financial had realized losses on medallion loans of 0.04% for 2015, and 0.0% in 2014, and Medallion Bank had realized losses of 0.0% for both years. These results continue to evidence the solid credit performance of our businesses."

"Medallion's debt to equity ratio was 1.45 to 1, providing room for increasing our leverage and growing our businesses down the road. Additionally, we had over $31 million of cash on hand at year end and Medallion Bank continues to have the capacity to raise significant additional deposits."

Mr. Hall added, "We continue to look for opportunities to replace higher cost borrowings with lower cost fixed and floating rate debt, further enhancing our profitability and lowering our cost of borrowed funds. We see additional opportunities to continue this as rates remain near historic lows."

Medallion loans were $308,408,000 at year end, down $3,486,000 or 1% from $311,894,000 a year ago, representing 51% of the investment portfolio, compared to 59% a year ago, and were yielding 4.09% compared to 4.03% a year ago, up 1%, reflecting our increasing rates as loans refinance. The decrease in outstandings primarily reflected increases in unrealized depreciation reflecting current market conditions, and relatively stable portfolio markets. The managed medallion portfolio, which includes loans at Medallion Bank and those serviced for third parties, was $667,863,000 at year end, down $36,950,000 or 5% from $704,813,000 a year ago, reflecting the above and portfolio decreases in the New York and Chicago markets, reflecting management's decision to cull weaker and less profitable borrowers from the portfolio.

The commercial loan portfolio was $81,895,000 at year end, compared to $71,149,000 a year ago, an increase of $10,746,000 or 15%, and represented 14% of the investment portfolio in both years. The increase primarily reflected growth in the high-yield mezzanine portfolio, partially offset by a decrease in the other secured commercial loan portfolio. Commercial loans yielded 12.80% at year end, up 7% from 11.91% a year ago, reflecting the change in portfolio mix and higher yields on the mezzanine portfolio. The net managed commercial loan portfolio, which includes loans at Medallion Bank and those serviced for or by third parties, was $122,463,000 at year end, up $8,177,000 or 7% from $114,286,000 a year ago, primarily reflecting the changes described above, and an increase in asset-based loan participations purchased.

Investments in Medallion Bank and other controlled subsidiaries were $159,913,000 at year end, up $23,065,000 or 17% from $136,848,000 a year ago, primarily reflecting our equity in the earnings of Medallion Bank and other portfolio company investments, capital contributions made, dividends paid, portfolio sales, and net appreciation, and which represented 26% of the investment portfolio in both years, and which yielded 12.74% at year end, compared to 11.44% a year ago, primarily reflecting the dividends from Medallion Bank.

Equity investments were $6,859,000 at year end, down $851,000 or 11% from $7,710,000 a year ago, primarily reflecting increased equity investments offset by portfolio depreciation and the transfer of an investment to investment in controlled subsidiaries, and which represented 1% of the investment portfolio at both year ends, and had a dividend yield of 0.72%, compared to 0.86% a year ago.

Medallion Bank's consumer loan portfolio increased by $147,340,000 or 31% to $619,887,000 at year end from $472,547,000 a year ago, and represented 41% of the managed loan portfolio, compared with 36% a year ago. The consumer loan portfolio yielded 14.06% compared to 14.71% a year ago, primarily reflecting changes in the portfolio mix to loans with higher credit scores including our home improvement lending division where average FICO scores exceed 760. The increase in outstandings reflected increases in all product lines, particularly the home improvement and recreational vehicle lending portfolios.

Overall total managed assets increased $158,000,000 or 11% to $1,655,000,000 at year end, up from $1,497,000,000 a year ago and the Company's book value per share, or net asset value, increased from $11.16 a year ago to $11.42 at December 31, 2015. This increase is primarily a result of the ability of Medallion Bank to retain earnings in addition to providing a steady dividend source to its parent company, Medallion Financial.

Medallion Financial also announced a distribution of $0.25 per share for the 2015 fourth quarter, compared to $0.24 per share a year ago. This brings the total distributions declared over the last four quarters to $1.00, up 4% from $0.96 in the prior four quarters, and equates to a yield of approximately 16% based on the closing price of the Company's stock on February 16, 2016. The current distribution will be paid on April 11, 2016 to shareholders of record on March 31, 2016. Since the Company's initial public offering in 1996, the Company has paid or declared in excess of $254,000,000 or $14.31 per share in distributions.

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 2014 Annual Report on Form 10-K.

MEDALLION FINANCIAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
			Year Ended December 31,
(Dollars in thousands, except per share data)			2015				2014
Total investment income			$	42,653			$	41,068
Total interest expense				9,422				8,543
Net interest income				33,231				32,525
Total noninterest income				319				509
Salaries and benefits				11,644				12,803
Professional fees				1,486				1,194
Occupancy expense				877				798
Other operating expenses				2,717				3,094
Total operating expenses				16,724				17,889
Net investment income before income taxes				16,826				15,145
Income tax (provision) benefit				-				-
Net investment income after income taxes				16,826				15,145
Net realized gains (losses) on investments				7,636				(5,607	)
Net change in unrealized appreciation (depreciation) on investments				(11,916	)			3,511
Net change in unrealized appreciation on Medallion Bank and other controlled subsidiaries				16,830				15,643
Net unrealized appreciation on investments				4,914				19,154
Net realized/unrealized gains on investments				12,550				13,547
Net increase in net assets resulting from operations			$	29,376			$	28,692
Net investment income after income taxes per common share
Basic			$	0.69			$	0.61
Diluted			$	0.69			$	0.60
Net increase in net assets resulting from operations per common share
Basic			$	1.21			$	1.15
Diluted			$	1.20			$	1.14
Distributions declared per share			$	1.00			$	0.96
Weighted average common shares outstanding
Basic				24,315,427				24,850,496
Diluted				24,391,959				25,073,323

MEDALLION FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)			December 31, 2015			December 31, 2014
Assets
Medallion loans, at fair value			$	308,408		$	311,894
Commercial loans, at fair value				81,895			71,149
Investment in Medallion Bank and other controlled subsidiaries, at fair value				159,913			136,848
Equity investments, at fair value				6,859			7,710
Investment securities, at fair value				49,884			-
Net investments				606,959			527,601
Cash and cash equivalents				30,912			47,083
Accrued interest receivable				1,003			988
Fixed assets, net				198			256
Foreclosed properties				37,882			47,502
Goodwill, net				5,099			5,099
Other assets, net				6,997			3,758
Total assets			$	689,050		$	632,287
Liabilities
Accounts payable and accrued expenses			$	5,120		$	6,651
Accrued interest payable				1,302			2,171
Funds borrowed				404,540			348,795
Total liabilities				410,962			357,617
Commitments and contingencies				-			-
Total shareholders' equity (net assets)				278,088			274,670
Total liabilities and shareholders' equity			$	689,050		$	632,287
Number of common shares outstanding				24,346,693			24,620,623
Net asset value per share			$	11.42		$	11.16
Total managed loans			$	1,410,213		$	1,291,646
Total managed assets				1,654,658			1,497,295

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