Medallion Bank Reports Revised 2019 Fourth Quarter and Full Year Results - Medallion Bank (NASDAQ:MBNKP)

Medallion Bank MBNKP "the Bank" or the "Company"))) initially reported results for the quarter and year ended December 31, 2019 on January 30, 2020. Recently, and just prior to the filing of the Bank's 2019 audited financial statements, additional information was identified about three borrower relationships that represented 43 medallion loans aggregating $24.1 million. These loans were categorized as performing, and therefore had a general allowance for credit losses allocation of $4.9 million as of year-end. The Bank's financial results as of and for the periods ended December 31, 2019 were initially reported on that basis. However, upon consideration of the additional information about these loans, the Bank determined to categorize these loans as impaired loans and classified these loans as troubled debt restructurings ("TDR"). While calculating the impairment amount, the Bank also determined that 13 medallion loans already classified as TDRs should be treated similarly. The net effect of these adjustments was an additional $3.4 million provision for credit losses for the periods ended December 31, 2019, and an increase in the total TDR amount of $24.1 million. Additional information on 2019 results and information relating to COVID-19 will be in the 2019 Form 10-K, which the Bank expects to file later today.

The remainder of this release and the tables at the end of this release have been updated to reflect these events.

2019 Fourth Quarter Highlights

Net income was $6.7 million, compared to $2.4 million in the 2018 quarter
Net interest income was $27.7 million, compared to $24.4 million in the prior year period
Provision for loan losses was $9.8 million, compared to $11.2 million in 2018
Net charge-offs were 3.19% of average loans outstanding, compared to 6.90% in the 2018 quarter
Total assets were $1.20 billion as of December 31, 2019
The tier 1 leverage ratio was 19.35% as of December 31, 2019

2019 Full Year Highlights

Net income was $20.4 million, up from $5.7 million in the prior year
Return on average assets was 1.85%, compared to 0.54% in 2018
Provision for loan losses was $42.5 million, compared to $50.7 million in the prior year
Net charge-offs were 4.30% of average loans outstanding, compared to 5.60% in 2018
The recreation loan portfolio grew 20% in 2019
The home improvement loan portfolio grew 35% in 2019
The medallion loan portfolio decreased from $153.1 million to $107.7 million, or 30%, during 2019
Net interest income was $104.2 million, compared to $98.2 million in the prior year, driven by loan growth in the consumer loan portfolios

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, "The Bank had a productive fourth quarter. We will now report our earnings in conjunction with filing our quarterly Call Report. This was the Bank's second straight quarter of strong net income, which helped to produce a 1.85% return on average assets for the year. Our results reflect consistent performance from our recreation and home improvement lending segments as we continue to liquidate the remaining medallion loan portfolio. With more than $227 million of equity, we are positioned for prudent asset growth."

Recreation Lending Segment

The Bank's recreation loan portfolio was $722.4 million as of December 31, 2019, compared to $599.7 million at December 31, 2018. Net interest income for the fourth quarter was $22.8 million, compared to $20.1 million in the prior year period. Recreation loans were 66.9% of the Bank's loans as of December 31, 2019.

Home Improvement Lending Segment

The Bank's home improvement loan portfolio was $247.6 million as of December 31, 2019, compared to $183.5 million at December 31, 2018. Net interest income for the fourth quarter was $4.5 million, compared to $3.4 million in the prior year period. Home improvement loans were 22.9% of the Bank's loans receivable as of December 31, 2019.

Medallion Lending Segment

The Banks's medallion loan portfolio was $107.7 million as of December 31, 2019, compared to $153.1 million at December 31, 2018. Medallion loan delinquencies 90 days or more past due were $0.3 million as of December 31, 2019, compared to $14.2 million at December 31, 2018. Medallion loan delinquencies 30 days or more past due were $10.3 million as of December 31, 2019, compared to $20.5 million at December 31, 2018. The medallion loan portfolio provision for loan losses was $13.1 million in 2019 compared to $30.6 million in 2018. Medallion loans were 9.0% of the Bank's total assets as of December 31, 2019, compared to 15.0% at December 31, 2018.

About Medallion Bank

Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City, Utah. Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats, and home improvements. Medallion Bank is a wholly owned subsidiary of Medallion Financial Corp., a finance company that originates and services loans in various industries.

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 "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 and the potential for future asset growth. Medallion Bank's actual results may differ significantly from the results discussed in such forward-looking statements. In addition, Medallion Bank's financial results for any period are not necessarily indicative of Medallion Financial Corp.'s results for the same period. 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 the offering circular attached as Exhibit 99.1 to Medallion Bank's Form 10 filed with the FDIC. The Bank's Form 10 and other FDIC filings are available in the Investor Relations section of the Bank's website.

MEDALLION BANK STATEMENTS OF INCOME (UNAUDITED)
	For the Three Months Ended December 31, 2019									Year Ended December 31, 2019
(Dollars in thousands)	As Reported			Adjustment			As Revised			As Reported			Adjustment			As Revised
Total interest income	$	33,846					$	33,846		$	126,723					$	126,723
Total interest expense		6,112						6,112			22,521						22,521
Net interest income		27,734			-			27,734			104,202			-			104,202

Provision for loan losses		6,349			3,442			9,791			39,050			3,442			42,492
Net interest income after provision for loan losses		21,385			(3,442	)		17,943			65,152			(3,442	)		61,710

Other income (loss)
Write-downs of loan collateral in process of foreclosure		(134	)					(134	)		(2,543	)					(2,543	)
Gain on sale of loans		-						-			-						-
Other non-interest income		17						17			305						305
Total non-interest income (loss), net		(117	)		-			(117	)		(2,238	)		-			(2,238	)

Non-interest expense
Loan servicing		2,725						2,725			10,610						10,610
Salaries and benefits		2,259						2,259			8,806						8,806
Collection costs		1,636						1,636			5,519						5,519
Professional fees		770						770			2,722						2,722
Regulatory fees		526						526			1,722						1,722
Occupancy and equipment		173						173			576						576
Other		832						832			3,527						3,527
Total non-interest expense		8,921			-			8,921			33,482			-			33,482

Income before income taxes		12,347			(3,442	)		8,905			29,432			(3,442	)		25,990
Provision for income taxes		3,119			(913	)		2,206			6,457			(913	)		5,544

Net income	$	9,228		$	(2,529	)	$	6,699		$	22,975		$	(2,529	)	$	20,446

MEDALLION BANK
BALANCE SHEETS
(UNAUDITED)

December 31, 2019

(Dollars in thousands)

As Reported

Adjustment

As Revised

Assets

Cash and federal funds sold

50,237

Investment securities, available-for-sale

48,998

Loans, inclusive of net deferred loan acquisition costs

1,079,553

Allowance for loan losses

(56,443

)

(3,442

)

(59,885

)

Loans, net

1,023,110

(3,442

)

1,019,668

Loan collateral in process of foreclosure

30,639

Fixed assets and right-of-use assets, net

3,852

Deferred tax assets

10,506

913

11,419

Accrued interest receivable and other assets

28,417

Total assets

1,195,759

(2,529

)

1,193,230

Liabilities and Shareholders' Equity

Funds borrowed

951,651

Accrued interest payable

2,096

Income taxes payable

2,144

Other liabilities

9,308

(151

)

9,157

Due to affiliates

1,041

Total liabilities

966,240

(151

)

966,089

Total shareholders' equity

229,519

(2,378

)

227,141

Total liabilities and shareholders' equity

1,195,759

(2,529

)

1,193,230

View source version on businesswire.com: https://www.businesswire.com/news/home/20200330005632/en/

Market News and Data brought to you by Benzinga APIs