MFIN - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome everyone to Medallion Financial's 2021 First Quarter Earnings Call. By now, everyone should have access to the earnings announcement, which was released prior to this call and which may also be found on the company's website at medallion.com.

Before we begin formal remarks, we need to remind everyone that the matters discussed on this call include forward-looking statements or projected financial information that involve risk 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 as information date this and call during of statement of based is available call. forward-looking of made financial this the Each to us required update forward-looking to obligation any disclaim statements We unless by law. our would Mr. like introduce I now to Financial. of Andrew Medallion Murstein, President Thank you, sir.

begin. may You

Andrew Murstein

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

and Hall. Larry Joining today's is call CFO, me our our on CEO, Alvin Murstein;

first fourth quarter we result XXXX. continued pleased the quarter show, into a from the the As that strong of we momentum are

Let's and quickly Medallion the over segment, then some highlights I you touch upon before call will on commercial the Hall. give the turning Larry consumer to segments

demand downward. of company net taxi partially These which from beginning factors, we increased the this adjusting quarter. the experiencing was City with up, non-cash New for a values of quarter, a significantly dollars New York slightly Medallion along some New in adjustments York unchanged valuation begun several York $X.X lending for million City. interest medallions to result left Medallion than loss $XX.X in The segment smaller open prior City slowly values have while in million As the market year-ago uptick quarter, loss including the several loss lower to led million an

XXXX debt the Additionally, medallion-related and our from resulting placements were gain mitigated partly December the debt XXXX on losses successful quarter for extinguishment quarter. by a of in million private first $X.X

while resolved portfolio, again second fintech XX% recreational March this loan portfolio seasonal the consumer resulting volume Medallion quarter. typically busier strong We the the last When we active in represents should Bank looking of potential into hopeful gross of optimistic with another Our of robust, XX% year. deferrals partner, volume second and will Loan be economy and our largely our see were the year the increases as in will as receivables In and XXXX. the net a as from from stabilize. consumer XX increase portfolios which non-binding partners home March this X the half XX, were we and will grow much possible months, while executed quarters. growing continues efforts program consumer our the XX, to total as ridership XX% quarter increase bank Medallion The we loan posted volume remain last March next be of begins year, we remain continue in head COVID-related recovering originations as given to payment third at will from XX% now in see up an once days. on of the improvement term the quarter a XXXX, Bank sheet first year. that at in remain to

the is On needed business. been of the Paycheck companies mezzanine portfolio portfolio strong we have flow full in mezzanine were as of seen the performance able The providing commercial year, liquidity. year, The the is liquidity the remained side, we've end access deal XX-plus Program our last strong Protection this slowly years by and the recovery that to recovering. in many a

company's a provisions to in XXXX touch of medallion quarter year assets million XXXX. compared XX, exposure ratio at million XX.XX% X Tier our of an to X% Net $XX.X XXXX, additional in comprised March Medallion closed assets, segments and due as quickly part, highlights. of we income foreclosure XX, commercial million a total as Including the of took process COVID-XX. lower, total the leverage some me Medallion was first Let X% ago, upon March with lending and to which in collateral capital. first Chicago to loan from and Bank increased compared result consumer $X.X quarter $XXX.X the owned of total

the So that, highlights on provide who Larry, to the additional I first will turn call over will now with quarter.

Larry Hall

a Thank $X.XX you, or in in net prior of compared per primarily Andrew. hope loss quarter, Net share the to $X.XX the behind us. as was consumer lending of interest year second share was compared or $XX.X contribution the million reflecting the profitable we was $XX.X $X.X This issues million our medallion income are the the income XXXX that million segments quarter. per million Net in in to quarter. row quarter a $XX.X

Our above X.XX%. our strong of net has net when quarter. We a cash increased quarter-over-quarter $XX.X is XX% first with to the been financial to consistent institutions. $XX.X in margin activities compared million provided million interest first Net well XXXX average This quarter margin by interest from reporting. in ended other the operating

Andrew in March provision a in recording loan Total of for $XX.X of improvement. As the million the foreclosure net for The compared recreation $XX.X net. decrease. to XX, Company's prior in of compared York stands booked segment, XXXX was $X process in New provision XX% $X $XX.X stayed March million values million portfolio Medallion quarter. for quarter million as a year million quarter loan discussed, from loss $XXX,XXX $X.X of XX, the exclusive losses a last losses million the first an previously provision home loan while provision for collateral was loan medallion for We at City $XX,XXX benefit at the and same provision and XXXX, to lending lending a XXXX, medallion

well. the as improvement losses XXXX as on which growth chose quarter, in as immaterial than this of of selective quarter, the continues rate our from down average well a portfolio be the experienced XX.XX% cautious remain was in deferral provisioning consumer still interest lower loans recorded consumer grow, to were yields business, as expect line but home we in more underwrite we expectations. The loan growth to XX.XX% portfolio's percentage and we portfolio. lending, lending the As a we has the our recreation in with loans lower as to faster state Consumer

All year. the $XX.X from are of to lines growth first company's charge-offs for continue commercial are in million while and consumer income showing and delinquencies, the a consumer million increased million was income $XX.X we and low Net which lending quarter quarter, lending throughout segments million hopeful will XXXX our $XX.X to the $X.X compared a XX% to XXXX first year ago, in net XXXX compared interest increase. the

the pipeline, yield large net the is $XX.X in at $XXX,XXX year year. segment of to the a $XX.X Andrew. a growth XX.XX% That portfolio the quarter to lending the in of commercial in million XX.XX% we lending future same that, year. Our to rest the now quarter was average reflecting pay at said, period off interest call last back commercial first the $XXX,XXX the recorded million income period the meaningful and net the of same The compared bookings last high ago. very With end The compared and early was first the relationships. over turn of level several anticipate I'll year,

Andrew Murstein

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

Operator

Instructions]. [Operator

first Sandler. line Alex comes the question from Piper Our of Twerdahl with

Alex Twerdahl

It you decreases? well wondering, was bit drove professional it in might more on was release, I little as the elaborate And led steps on little if you're could those - as if both you can by salaries expenses the those what more great a produce steps wondering, will be. expenses. for I I value bit decline then, to think in a hope taking you long-term what that that says your was elaborate in shareholders. see

Andrew Murstein

we and offices. consolidating Alex. want I We're I shareholders letting ended what Thank know, been we well, we a cost our furloughed think people you, as up on management wants ago. Sure. of a focus that's couple months continuing - so and them what discussed go and lot to prior, of cutting, that's as what We've then want

that other was was cost more line heading measures, high, that of regard. a year so ahead we quarter, are trends of a taken ago it in a bit bit want. - schedule have We're other Legal, We year last this little with so abnormal the little period, so kind where was probably exactly expectations. definitely in

you're these So over to continue. see going I time, trends think,

money operate to going as continue as to we're lean I save think, and possible.

Alex Twerdahl

not point remainder of you good that's there say second would for non-core, quarter? some that that's the the that there's of pretty quarter of seasonal the in year, starting a indicator kind of going to in are as items non-recurring nothing So the the for those first is reverse

Andrew Murstein

bit legal, that that due, be to a lower with you little the to to downward line to see It It's over if we general not example, past choppy. on will be collect direct is could could hopefully measures and continue up, loans time. it a trend where are time-to-time, but go number for going try take from

we we'll going of lines well, building and we're continued - the at lot be be. point north consumer other well our great. XX%, so of selling value business. non-core so ARK, RPM. been off the there's just shareholders, where ROEs off. to That's terms with that's focus as in we've The In of business, to looking The the core are on of plan line the second really We're sold our bank. on some doing lines of the now a is grow It's across the value lines, focused for of doing something strategic

saw last in quarter. the per you the average so, about or on As million earned bank quarters $XX.X two

from they year run that's $XX grow million great So per a that. rate think, over of and I can

now. we're So a good right place I in think, very

Alex Twerdahl

touched you about a on the Larry, dropped XXX little then, bit, yields points. And basis Great. consumer

do and out a terms remind between quality. I and maybe rate Where to time? going think, correct? correlation yields alluded between interest those no and over yields is those you mix Can benchmark home really shift shaking you any in little improvement you there of see just kind the rec us, credit bit of up

Larry Hall

stay mean, pretty with going I we Yes, they're correct. quarter. to what this probably reported consistent

quality to come continues little borrowing We're that. lower improve and are strong. the real having down and aspect the bit margins interest costs remain credit also net a to the likely yields from As so

Alex Twerdahl

in you space? it. competition that Are Got any additional seeing

Larry Hall

Yes.

Alex Twerdahl

over Okay. debt And that you beyond paid guys little million senior in in million then a you even bit $XX about $XX notes, April. off the raised

bit for what proceeds the $XX-plus you can elaborate So is? additional little maybe that a million on more

Andrew Murstein

Yeah, very the a around We with the last that There turned deal pleased has ship how few been interest thankfully oversubscribed. was we're really of years. our in win company. lot

because are rating we traded X.XX% So has that with the probably or and cost MFINL an was, going really the investment-grade been our for money center slow in as us a profit will our more growing because We years under that of if and X%. Capital, have better debt Medallion the We of we're X.XX% down like other big a last They've go to few in out. was some over years was received lots give a replaced to about They position. all to rest down. you that capital start We'd at ago. now, targeted not money them of I little money so. time. banks, on pay banks of pointed publicly-traded think The been about issues, of didn't we that but - much

which the have want we to grow. of out guarantee past, and probably, the you the and And put that. focus of turned future, is XX% where put more need our is are we to well returns really there that, around So lines probably us of want business even to The money knitting with We so to mezzanine what Minneapolis, returns. into more to that's we money want no averaged bank in group, higher as stick with We on what know, just our that. bank, into done should be. those than be but really

Alex Twerdahl

me. what And in that Perfect. just the or for released benefit? had you from final loan, dollars exactly million The you a a drove question provision that provision medallion benefit that

Larry Hall

need been booking it's mechanics. flat we that Good quarter. Just the time a an stayed lower and the we to the the that in York got, since New long market recoveries provisions haven't any had market that fact a be on adjustment and

Alex Twerdahl

What were do - you handy? of have recoveries level the

Larry Hall

was $X It million. about

Operator

line Riley from Securities. of with comes Moss B. the question next Steve Our

Stephen Moss

bit of the here less mix hear for up Maybe of coming further in you following in remainder terms expansion basically I on little more funding where down. the and shift cost yields year? start. the you are steady or heading of margin think margin just to hold the Do terms a or

Andrew Murstein

just I or is margins exceptional. terrific. really I think, the are margins. the X.X% increase for X.XX% could we banks so, mean,

we're off, now the on So that's growing public that, The the grade loans, we X.X%. and average bank lower is that Brokered about on margin had. are the been than books I about at X% funds roll as as and just goal. noted. that's we basis cost borrowing or focus holding The continue debt so of Those rates investment points debt coming was our those rated to CD CDs, medallion that XX down been has down.

it's actually the to goal achievable, margins. think is interest very So and is I increase net

Stephen Moss

All the right, and remaining up strong. tying color the loan of terms terms growth in in here. just then of pipelines the Appreciate

you and recreation think low-XXs about about do call a So growth it percent for improvement or fair? for high-XXs double-digit rate home

Andrew Murstein

XX% think, Yes, by by rec year-over-year we grew, XX%. I home and improvement

goals market, to strong are banks every are but the year, beat came is the we we even XX% per we our the beat rest minds hurdles. never of if growth. and are business hope to our in XX%, growth struggling XX% that's year, year at show were, this to In prior and our asset those so growing on laurels by and where So extremely we

Stephen Moss

just terms partners then - any any just with in months them, over to the updated on side gone thoughts and of just the fintech working here as of of how with the expectations of volumes? last things update couple in new And regard you've Okay. terms

Andrew Murstein

for fund the it, the company fintech an send that interesting us buy in so. the within don't business We us That's those our know, to they model for bank loans the Utah. that's where loans back day or line

So sheet no balance to us. there's risk

income fee earning are on We it.

a days buy before have the for of float it couple back. You they

think, to is We expecting should more But opportunity up. So there an and companies. in for very fintech it ramped also invest event. these business a get need be XXXX contribution a not over it to in profitable XXXX time. I time much We're us really it's

filings, a company expecting public we're have our in Upgrade called great return see investment we You'll that. an in and a from

could growing working we So business, there's them. booking the or investing even loans whether partners of strategic that this it's some really ways in explore their in many and with

big XXXX I going growth beyond. to a be and in area think, us it's for

Operator

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

Michael Grondahl

delinquencies consumer said we First guys it question, in kind normal overall should that about charge-offs a as for the I the business? the and of you think helped stimulus clearly of What was in bank. provision million $X quarter. think,

Larry Hall

actually are what rates trends The real loss to compared strong indicate. the and delinquency levels what been reserving have

direct rates done. not quarter, soon certainly we business for the X.XX% imagine at business. improvement which for think, are change they I anytime So unless I for and the to And the were wouldn't about X.XX% loss accelerate, those home have likely

Andrew Murstein

X.XX% been Just and to been add there to that, than only The the the have a been with that, actual X.XX%. reserve the stated loss reserve, lot actual losses the X.X%. have less rates the so of losses have X.XX% home improvement, Larry

Michael Grondahl

Got coverage it. Yes, the looks clearly. good

Andy, but the average, I are rates that on current brokered to your what's volume lower shift you basis books, you can said, XX CD the think that Secondly, X.X% points, rate? your dollar

Andrew Murstein

too to I'm life obviously, but the average go off, don't roll the they When we CDs, not Sure. out definitely of it's going sure, the long because happen CDs. on

than less or years even maybe I X think, so is probably average that. life the or

legacy we've When hit, X took lot were high lot when on us of and COVID retrospect, higher banks up some about CDs everybody kind years market a got rates banks CDs nervous at of loaded So rates like CDs. was ago. a with our lot the books in of a on of

points. at money if it's basis between X XX you rates, So our X today, and those XX but and X.X% look were to year money, X% at

every improvement quarter, see say an I'd So in you're to that. going

Michael Grondahl

about down? $XXX $XXX can you million, amount rough a a it. that there? And Got have there is estimate just get - Do million dollar adjusted

Andrew Murstein

Larry?

Larry Hall

billion It's of CDs. $X

then every it's the over a everything to rates over going off well. rolling growth large is from X to at the current be mean, is new rates that at going low they're existing all number I those net and the portfolio month. if be rolls basically pretty years, So as

a So over that bit. the the quite the year, rate - course number of should drop

Michael Grondahl

Good, good.

Okay. more also mix, give selective were but home little bit, a on improvement you kind some consumer the you were talked And were little of more a example selective? bit how in Can an yield then, was of a guys us you down you underwriting. bit about that of you said little

Andrew Murstein

business, when raising when time they - them so selective. being by we so we started we've were at are XXX, today, or over ago in Yes, consumer Home the FICO and so around really started don't about years have - about XXX scores Sure. that this there improvement, we that bank even average the been are and that we XXX. we X-or-so and XXXX was started FICO scores

and came of bit improved years business, may that, But funds at they a very have with have all. There's our think the much than did more we been ago in even I yields even little if of a than a which if yields we strong time down the new they So that really down quality did, offset over come but whole not competition the period. would credit that. little, cost

Michael Grondahl

just lastly, what think worth is and Upgrade in today? what Got it. And do was that investment you your

Andrew Murstein

about invested there of maybe the values explosion has - been $XXX,XXX of or fintech and X companies so an ago years We companies.

think I a plans X, in their but run very well So would - the or to year next go company. it's probably public

time the Our also. for sell over to on more I off to side, rather investment worth partnership value non-core many off plan to it fee probably like there position for the is to private would It's It's the us XX strategic was another worth so. times we're sell getting interest what be to companies, if but is where business that just XXx probably months or the be we hard surprised next plan the own, be we'd really income, the our but paid it. position wouldn't over that

Operator

reached we over back to would gentlemen, And to Mr. turn end I the any closing Murstein question-and-answer and like session. call for ladies remarks. that with our the And of

Andrew Murstein

happy department attending thank up, were to contact at if great follow and have for Investor a wanted We're to Relations XXX-XXX-XXXX this not Thanks that investorrelations@medallion.com. everybody, To call. at just or end, please email morning's your answered. everyone questions our day. I

Operator

This concludes today's teleconference.

lines now day. may this wonderful your You time. a participation, at Thank have for disconnect your and you

Medallion Bank (MBNKP) 5 May 212021 Q1 Earnings call transcript