MFIN - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome, everyone, to Medallion Financial's 2020 Third Quarter Earnings Call. By now, everyone should have access to the earnings announcement, which was released prior to this call, and which also may be found on the company's website at Medallion.com.

Before we begin formal remarks, we need to remind everyone that matters discussed on this call include forward-looking statements, or projected financial information that involves risks and uncertainties that may cause the company’s actual results to differ materially from those projected in such forward-looking statements and projected financial information. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them.

For further information on factors that could impact the company and the statements and projections contained herein, please refer to the company’s filings with the Securities and Exchange Commission. projection on information the information this and call, during date statement call. based is available forward-looking of made financial this of Each as of by any any statements to disclaim update We unless obligations required law. forward-looking I would introduce like now to Mr. Financial. President Murstein, Andrew Medallion of sir. Thank you,

You may begin.

Andrew Murstein

call. everyone, earnings morning, third you and participating thank in Good XXXX our for quarter

Joining me Hall; our our of Director is and Alex Murstein; Arzeno. Alvin on CEO, today's Investor call Larry our Relations, CFO,

on third status, result jump ongoing City the from a right carrying placing all Medallion to of of steps substantial value the into pandemic Medallion the value the COVID the net a thus non-accrual remaining quarter. portfolio, on last of company of the impact the just XX at and Medallion on Let's took quarter, the collateral New York Medallion portfolio drop negative impairing the $XX,XXX industry, our loans XXX,XXX as of lowering necessary taxi the end

for collect, we long-term other overall While the taxi our health City. upon, ridership New of recoveries industry things, York primarily such ability among the in the remain dependent and recovery cab are and optimistic about potential to

nine year, to X.X AT and Medallion just assets, loan we is X% on process foreclosure, of the the collect of the assets. months stood the total which the related the Medallion managed Medallion-related third of of lending million, portfolio For million end at quarter, first net the total company’s assets. collateral $XX in

better of puts to downs our our assets. now segments Medallion become believe just million of XX.X loans reserves, terms We us, effectively lending the In behind core now of write quarter’s or Medallion books, focus and losses that is attention. on allows figure just this X.X% and

being will we touch let's now commercial that our said, optimistic quarter We’re With lending have consumer a segments. and strong upon fourth XXXX. and strong that

meet quarter, up XXXX, strong and from for Net Medallion home related asset quarter, our originations Other payment XX% credit quality in Medallion third this overall At origination, for XXXX continues able XXX XXX and consumer resolved the demand just average X% that this leverage the quarter. at segments course scores segments, improvements economic slightly which loan largely growth demand the $XXX.X volumes of as tier segment. quarter. XX.XX%. third one of while below from was application capital, were loan to million the to recreational September deferrals in home and lending now in of third of portfolios consumer million the the the pursuit led to XX% the had are lending quarter, in XXX FICO stayed the segment, recreational during a home for Our improving in vehicles and above once again tightening grew of ratio end Bank XX, criteria be improvement present quarter, and environment. improvement in Bank recreational had the in

spring. we loans previously the our second remain quarter. the in will originating As bank partner launch for We Fintech began first partner past this optimistic fourth its stated,

the looking loan stable. look the the be companies as any took were third we in year, loans selective flow million and was of Capital an this of this like and against at September on with for has this Bank, in is to Medallion remainder remains present, million call to equity Medallion’s quarter. XXXX, of leads industrial new develop the Though deal Larry, quarter. this compared year, XX, $XX.X third and XXXX, partial who to nor we'll totaled portfolio Medallion will over across quarter, and million demonstrating additional $XX of remained partner portfolio, reserves geographies XXXX a company's an to The non-accrual continue We quarter, lending to segments loan the end broad the of reserve portfolio range and of additional $XX.X One third non-accrual were commercial still on placed turn the million business. to continues put a income for well-diversified Net at with commercial net against investment provide lending $XX.X commercial the taken in consumer industries. was million end the the grow quarter. and highlights third bank year. and No now months for the the the I'll $XX.X nine

Larry Hall

or prior income Net Thank net per Andrew. quarter. $XX.X share, the $X share was million $X.XX in loss or of year million compared to you, $X.XX per

stated, Medallion our commercial a our Medallion coming and minimal all profitable in for segment recorded our the results yields on than impact As and Medallion easily on higher the become lending as long-term a It COVID-XX should the Medallion lending consumer with now along lower impact of loss our impairing have Andrew quarter. segments, clear previously we million loans, that $XX.X losses of of more should segments, outweigh from a unprofitable uncertainty moving and segment, for result will that Future yielding ever segment. the of forward.

third exposure Excluding or of $XX.X a foreclosure from of Medallion year foreclosure, a assets stands $XXX.X and quarter, assets, XX% a the million XXXX the XX% net total now process and our process from in Medallion at When September portfolio or total quarter. million at collateral compared to the of XXXX, ago. owned end of end, XX% assets third in XX, total Chicago $XX.X million was the loan of loan decrease Medallion the as year loans of including X% decrease

to The the increased which with Medallion margin quarter provision the portfolio resulted The XXXX this line we difference quarter. our X.XX% interest took assets. XXXX the third increased for quarter. the XXXX quarter, in last million interest-earning of the in Total net large quarter. increase the remained on compared the reflected and reported in performing driven million was assets, X.XX% losses second million in quarter, the third in quarter, by this yield in XXXX loan provision we $X.X $XX.X on our X.XX% from was third increase to from this the quarter, $XX.X Our

of and the approximately result all the million. of the values, City collateral As and in write-down the a company market increase New York a recorded other in impairment Medallion reserves Medallion almost $XX.X of net portfolio

For gross $X.X months the of loans of continues tenths the the XX, deferral months in ended XXXX. nine as to June remain September $XX.X of program XXXX, Consumer $XX.X a XXXX, for September ultimate provision XX, loans September was or for to the million nine compared compared XX, of $XX.X XXXX. five as still million be state were The million losses the loan deferral gross to outcome consumer percent of total million ended X.X% loans of of or seen. consumer to XX,

is current to outpacing business tightening choose year quarter, growth rebound, economy Marine in and and on RV we that XX.XX% the XXXX, of as being consumer at in portfolio’s as over and evident year. due period However, were become improvement compares the from loans begins the year, The same businesses. underwrite. underwriting and consumer of improvement our of criteria, loan of in the this XX% at state borrowers the end a interest quarter, the deferral substantially business the home less home our XX.XX% XX.XX% to of it grew mainly again. loans second last growth quarter, result the of a to average our This than more The this was rate selective rate

million portfolio compared commercial Our $XXX,XXX year. ago. lending same commercial now of months XX.XX% nine of recorded at The end for to the With yield to the net segment that, I'll and interest lending at period income $XXX,XXX third quarter turn year. quarter, call XXXX, net and $XX.X the year of million back was the was $XX.X third of the million The in end in last Andrew. first the a the average compared $XX to XX.XX% the

Andrew Murstein

now begin of Thank you, Operator, call the Q&A we Larry. portion the can

Operator

[Operator first Sandler. comes Our the Alex with Instructions] from Twerdahl Piper line of question

may question. You with proceed your

Alex Twerdahl

Hey, guys. good morning,

Andrew Murstein

Morning.

Alex Twerdahl

at think drop how that actually recent market. values I I'm it's seems in wondering was collateral if New conservative some to me look just I near in Medallion if level collateral off, $XX,XXX in the conservative to value or It are approach, to you when you just guys that for transfers arrived in at pretty York the the City. or First term. just going down fact a values wondering

Andrew Murstein

you, Thank Alex.

did a our through. in about what's officials usually talk brokers we through, about view. diligence to We talk try the here. not quarter we So this the what is, and we and quarter, a again that that median at all number, few of do, length transfers. transfers do about was correct the what lot usually of were We go ruled and out gone we to look for the above We but to city the arm’s has due

officials So not $XXX,XXX of XXX were kind perhaps of we arm’s were indicated between that couple city out knocked and length. a sales that

off, and And how is take about Medallion an then median as a we to estimate. So selling cost about that if the you got knock that's $XX,XXX, we that $XX,XXX. $X,XXX usually

business future York it's coming The In terms tell. in it's looks City. hard slowly like to New of back prices

tell if to occupied, lot pretty streets, test more a you'll but eye the Just cabs see it's be. look you will predict kind might future hard values that what of you the on

Alex Twerdahl

the a in is of then us accounting is couple us maybe, can not arise? that possibility write-up the portfolio? that over help works, then the you a remind Larry, terms now be in next And recoveries, or the could these quarters, there just one, P&L And they'll the thing collateral how whole that of that rebound, Okay. there us how values kind understand should the actually they hit non-accrual, do remind of

Larry Hall

Sure.

on back original reverse The able you're you've reserves least to first question, booked, always part that amount. of the the reserves, to the at

you industry likely above do of one going change kind But us of reversal. and You the years, on it's the our reserves. a mind par, in that of quarter its for would what's asset can any not original an obviously make write Medallion but can't reverse just last because up couple

be that we really to all think a we likely of it believe booking be we kind was in to interest I be most non-accrual quarters for, that sustainable. going before other of would won't several basically the need is of all viewed I interest accounting, and activity the mean, we impairing of put any If received income. applied to the on comes is cash and everything there principal. to recovery. Turn reversed was cash more that a see that aspect it charge-off as was that accrued the course, And that

Alex Twerdahl

mean, for clarifying I you hands you now that. off your selling washing to continue and the of Thank would or completely that just then, Okay. it, written it? down, plan it's And servicing consider portfolio you

Andrew Murstein

equity private Back in a that lot probably interested selling There They more or higher was there pandemic it. firms in five a kind who we'd spoke January, funds or interest open-minded No. and were be to, this targeted of were before return. sector. hit, major of in the about right this about XX% space. usually we

level, our our So But would get can I'd those fair discounted rather mind, probably rather them if than at give price. we that. sell shareholders, a books, of we returns of depressed to them I entirely types was think price at the and some in our entertain off

Alex Twerdahl

Great. questions. taking for my Thanks

Andrew Murstein

Sure.

Operator

you. Thank

question Securities. Northland from line Our next comes the of Grondahl with Mike

your with proceed may You question.

Mike Grondahl

of figure that of quarter, maybe morning, good take trying how could out did couple X%? the loss? A contribute the annualized was interest much talk XXX to times that's One, And roughly questions big on the you to if Yes, or that is the forward. hit income, going How to the X% revenue then Medallions. accrued in reversed to quantify was Larry, the that? much that how hit, for interest a us going guys. Just

Andrew Murstein

in of So much. the terms hit not

had of unfortunately probably months only in. year, come this The of nine about we payments first $XX,XXX

to it's So in going not really the future. us affect

this talking about been which here - even only everybody never talking now X%, about $XX XX been million you're was If loan near million years, $XX at if not. million level. is you're paying, I've which $X.X it's portfolio, a anywhere they're

us effect future. it should a not big in on the in So, have

Mike Grondahl

about but portfolio I think right you two support? consumer above on little your talk is consumer can Q's portfolio. then tier bit little percentage with one coming, One a do XX%? how deferred then And think or that secondly, And of what getting your it. is, the just - now, a like we growth bit Got forbearance questions

Larry Hall

from of of $X.X that's consumer in roughly percent a The XX. consumer million sharply five deferral, second X% still state the tenths loans or million were September quarter. or of the at at And gross a $XX down loans

Andrew Murstein

That deferrals Yes. has out great. expecting portfolio really been us. for been it's honestly, were very well higher We working and

which so, country. X% the of, so. of bank, capital I ratios XX.XX% still to is most in about ratio or the the It’s percentages don’t We're the banks you're top in of Most have terms right. of banks. very In or to XX% capital compared high probably know,

we what to then it of growth were it as So be, we our sure this at it's we it that the will when don't pleasantly very at this we And write-offs that business it didn't and in make is the capital Medallion’s it don't would as growth was know. going off, consumer capitalized, along. I chugging all. think think The and holding well affecting be the affect were all. breath quarter, keeps consumer hopefully. high kind wrote ratio just affect wouldn't those And we was, surprised Medallion to

Mike Grondahl

hear. to good That’s it. Got

you. thank Okay,

Andrew Murstein

Great. Thanks.

Operator

turn Murstein, call to reached gentlemen, we Andrew of end for have to like and closing today’s Ladies session. would over back Mr. question-and-answer remarks. the this I

Andrew Murstein

wanted And for you, I also thank morning’s attending Thank this everyone to Laura. call.

question, follow To email Thanks, end, at day. not department our at was that We’re investorrelations@Medallion.com. have today. answered it please and your Investor happy XXX-XXX-XXXX to a contact if great Relations everybody, up or

Operator

Thank you for today's conference. us concludes today. This joining

your time. may disconnect lines at You this

Medallion Bank (MBNKP) 2 Nov 202020 Q3 Earnings call transcript