- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, greetings and welcome to the Medallion Financial Third Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder this conference is being recorded. I will now turn the conference over to Ken Cooper with Investor Relations. Please go ahead.

Ken Cooper

morning, good and you, everyone. Thank Financial Welcome quarter call. third to Medallion earnings Corp.'s

risks and today to to Reform XXXX provisions forward-looking and Murstein, today are Chief uncertainties actual Act release and Financial obligation Certain we forward-looking the to our date Safe and of me are statements our could that results President undertake forward-looking the both Cutrone, of today to Officer. are not Those unknown statements call statements pursuant update do press during these The in made differ cause made Harbor Joining the within the statements. of Andrew such are filings the this Such statements Private Chief risks as materially SEC. Anthony and constitute known of statements. amended. any made forward-looking with and subject issued earnings of described Operating call from meaning yesterday and and Officer; the uncertainties in as Securities Litigation

to With turn earnings to near at third website Andrew? you presentation release, Investor quarter's me our let the press can over our our and of page. The top find presentation on the clicking Relations. the is call that now medallion.com addition Andrew. In

Andrew Murstein

you, Thank Ken. everyone. Good morning,

for to in $X.X period. results. this We continue we the very net where earned interest our in $XX.X We quarter year-to-date for lending see consumer We comes positive strong with the had a which rising yield rates. to businesses interest results quarter, The are growth million continues commercial growth our drove million and and loan quarter. income. our pleased another originations, quarter of in This

Each Marine RV was driver over fastest-growing continued the quarter. our growth, be and our of of XX% Home good segment loan year's XX% XX% origination business up commercial us. Improvement consumer and in loan solid note on our loans total a some also quarter in $XXX interest actions of did growth see segments put originated. net loan lending with a with The start million for to to a segment our is loan and For place XX% from had XX% growth. company, pricing increase resulted in we new recent important loan to last we with that It originations our growth key activity was benefit income.

During leader this are We to of of is rates. no the use period we and protect loan raise follower one increasing rates, rising in levers a this can rates of typically to bottom our our a than is fast times rather line different.

we of Regarding capital share per paid dividend declared during allocation, and the quarter. a $X.XX

plan million and we the we insight quarter turn $XX of total million to $XX.X increased We available used I in ended over additional that of our under million million some under repurchase million our Anthony, will to to now stock. with the will provide the $XX shares available In the who $X.X With roughly the quarter. the quarter addition, cash about plan. recently X.X common from call

Anthony Cutrone

and everyone. our directly high morning, to growth loan the second million attributable increase with $XX income Net Good the Andrew. X% interest earned the being from XX% the you, Thank quarter of yields and year's on quarter grew previous from loans.

and and rec due an our a segment, lesser growth Home increase commercial Our in in Part year yield points XX basis to the extent this interest prior is the quarter. points funds. of segments a carries to for from our net was XX the margin decrease a of from quarter, cost and Improvement lower by in X.XX% driven basis which quarter of second our

prevailing rise or from arise these to funds interest of cost our levels. rates at expect near-term We if continue

on our margin, interest rising for began quarters, compressing which effect what several to see past is rates the quarter. have As net in the expect third interest we we've a said, we to

we expect the $X.X in from well portfolio up also when to our charge-offs million, we do our incur margin quarter. quarter in higher Medallion we've loans, to our originations, $XX from the quarter growth net new lower will our in levels including quarters year of interest recoveries compression as addition our our over allow and charge-offs begun million contraction The prior increase interest was second to the in believe an which the rates loan respect charge growing income. and portfolio, counter loan on commercial our maintain $XXX,XXX increase loan and despite as loans, portfolio. up these in us provision consumer loan we the of that net on that We to to past two a benefit growth provision the in in Current penalty loss with

income as the cost XX%. operating percentage quarter Our third was for down came a net of interest and consecutive

our continue than rise, to line. As lesser at we grow, to we rate costs a but expect continue top to operating

Additionally, as income. and for increased attributable a well Net from we earned earlier, coming million in million interest $X.X to attributable $XX.X I quarter. absence loss the to legal professional earnings will compared as Financial net the The offset on to the in prior a ago income was which provision quarter, shareholders in in loan year and experience the investment continue a in fluctuate the our to XX% is Medallion year the growth elevated year, costs, continue gain higher to quarters. of remain the by decrease fintech $X.X equity to previous referred million

for Medallion the One and Our diluted period. segment. on earnings per for quarter the share was nine-month note last $X.XX $X.XX the was

Medallion That assets, With we million I million quarter, to $XX.X now questions. these to your $XX.X that Question-and-Answer down helps million ago. overview. $X are quarter and from our take further net which exposure related happy a Andrew collected to reduce just year the Session third our financial During covers

Operator

Northland line ahead. Instructions] [Operator comes first Securities. a the session. and Thank gentlemen, question-and-answer question from we go time, be Our you. from will Ladies Please, Grondahl Mike at this conducting of

Owen Rickert

is for compared as was This Mike. for What to loans as both last on Owen year? RV year guys. boat on and this the yield home as well Hi, improvement

Anthony Cutrone

Owen. How portfolio, The XX on ago. rec Hi, down basis stands yield year weighted our doing? that points So portfolio. about around is average on coupon from XX.XX% the a you’re

pressures. about to in improvements, the X.XX% it's slightly down decrease coupon our home from well primarily it's basis due home credit year On as The sits and ago. ago improvement, a at from a XX year as competitive points the

Owen Rickert

today? Got at blended it. during the rate of Thank more September? was what average What one. is the end one rate of quick then And where was And you. And the it portfolio the the CD quarter?

Anthony Cutrone

Sure.

so is range. happens to action anywhere blended quarter a points, XXX around points end basis the the or pretty basis from of there we come probably been at Fed whatever slightly side. ahead rapid of end two. on week Today, Last to XXX at the in were XXX debt movement putting rate on the XX at some XXX up They've we year, in time, there's So were this CDs September. of the the

Owen Rickert

back Got it. hop the Thank you. I’ll queue. in

Operator

Thank you.

Riley. question Howlett comes from B. Please, from ahead. Our go the of line Matthew next

Matthew Howlett

my Good guys. for morning. taking question. Hey, Thanks

to mean, Just home strong still the it's the very on growth, outlook the consumer improvement I segment. for about

slow. that, I could think quarter last things you said

a tightening new It raising Any outlook? rates, on update obviously very surge. looks the you're You're strong. under still

your seeing dealers, on partners you're what what segments from both you improvement seeing on from are side. the home update Just

Andrew Murstein

trying solid. to We've to growth continues look share. market pretty is Growth grow significant. XX% been Obviously

a So is We -- applications and have seasonality. QX. it but in part of usually lot QX more

solid it's But last So down. very say we'd year is I'd think we to expect opposed it in ahead. as to of what slow terms

Anthony Cutrone

still really any Yeah. know seeing And I'd significant is coming. strong. consumer agree We're The but of that slowdown, with signs that. they're not we

Matthew Howlett

Right.

you you You anything more still on Is changed a trend? -- the last raising still selective tightening? that rates? originations, see are from comments being still quarter? Are Has

Anthony Cutrone

No Yeah. there. change

actually increasing when business actually For on we quarter actually type two benefit that start our these the depending top There's a we recreational onto lag we vehicle improvement income we so fund, two. past there's and home the consumer upon to the statement that hit and to been next actually the should in or XX-day loans commit quarters when see line and it. or the trickles our of in anywhere the seeing a XXX-day from of lag a we've when

probably know could that XXX don't upwards of of terms experience costs margin in when basis cycle. we to top points basis dollar-for-dollar But going will this begin I up, think increased line going points be I XXX through it this done. because to I when see our significantly we're with. we is large a get had

Matthew Howlett

that my Got And you. next question. was

from normalization what about has delinquencies I'd to seeing know RV used the low. cost, seeing obviously the car I lot love started? car out are any broader a pristine. it's a patterns on I additional used the the remains seeing? mean, trends side in what The are whether market -- -- color mean, credit the -- on it's US. you you you're similar very hear there to about I more we're the any are been market. On more And it you're

Anthony Cutrone

we did uptick an in In see the Q, charge-offs.

historic get remain the to think normal Our for And level. some remains we But I low. strong we're consumer we're still pullback. normalizes starting that and experience, like waiting the delinquencies back said, a charge-off to just at it point

Andrew Murstein

bank know the as to touched than job niches for finance and to credit field auto entered over for out worked time they've never well when next model were bank be who's, if has a business we Leucadia. in finance were also also into cycles just It's losses we've a really very management do; our have still great the come you add of even well to or the recession performed they a And I'll went out XXXX, has team it really well. the that in that the with as into that obviously, well. extremely we we've forming And done running and business. never when expect we'd what XXXX recession not auto honest. done prior well different They done us us XXXX, even heavy

Anthony Cutrone

had rec. lower that division, Yeah. has than the And experience historically a improvement experience before our charge-off was we home which

Matthew Howlett

much It's FICO. then last higher And Right. question.

last just a us just time -- The other big we about bit we look mean be there's should how zeroed of line line I Do to mean, was through the the is fintech over bottom on you move that given investments? Just there'll how a given a should little some think the out? of I gains forward at think line, quarter. income around, in going quarter, gain that lumpy? long-term going line average there it's we walk loss

Anthony Cutrone

Yeah.

to past. I we've think that used a wish was the it, describe but word -- there I better lumpy in

we quarter our gain had a million our about mezzanine we one $X tied division. that's the on the charge to took division. quarter During that of prior million lending to $X.X equity tied In investments

it's the smooth it's gains to lumpy It's We're to word hard these exits. it. right Last we lot not So to investment. they earning. is a aggressive And disposition a and describe fintech one-time. predict of a going -- occur, the of when year on had it's

unfortunately, earnings going the I that's lumpiness forward. So, think – you're in going see we're our to

Andrew Murstein

also usually term, to add so long it speak. to out And smooths

XX of looked back we about We we course. the here in historically last XX%. results actually. this the results years. or averaged so into have and any can't entered the So results guarantee results future, – at in XXXX And the we went But over business the

points for been it's jump very a Anthony could But us. as successful out, So around. division it

Matthew Howlett

guys. the queue. Thank in I appreciate back jump you. comments, the I’ll Great.

Andrew Murstein

Thanks, Matt.

Operator

you. Thank

Our next go of Securities. the Grondahl Please question Mike Northland ahead. comes from from line

Owen Rickert

Owen Were quarter? again. taxicab there during collected recoveries the is any This guys. Hey,

Anthony Cutrone

income Yeah. the hit million We some probably Sure. $X.X was did statement. it about that have

hit quarter the last income that statement. think some it I $X was million

always over positive that produce on our recoveries it's But fair investments less. This lumpy predict results that recover to equity – said We've the and it's to the and the it's expect quarter similar hard gains to a we those amount. those. losses time

Owen Rickert

can Got that break it. And then out you chart.

Anthony Cutrone

It $XXX,XXX. said the actually $X.X I sorry, was quarter. I'm million in

Owen Rickert

commercial total out? related improvement Medallion. you recreation net Got charge-offs to And Okay. break home then, it. that Can our

Andrew Murstein

Yeah.

the was commercial to and portfolio, home $X.X So rec that Medallions. $X.X was million the of then improvement, million, $X.X $X.X of was $X.X million related a – recovery million in it million that

Owen Rickert

losses what Okay. you. loan And for? for that one quick Thank one. $XX more The was million provision

Anthony Cutrone

Yeah.

penalty well So net portfolio. just you're get seeing as $X.X we loan we the the about recovery increasing it's by growth million our spoke as that

minus are on reserves on the $XXX improvement points right loans. XXX or million about the basis and loans home So plus rec around the

So to that do through to the but we that portfolio, income and provisions statement. extent scale record that that that on continues our runs

Owen Rickert

my Great. Thank question. you for answering

Anthony Cutrone

Thank you, Owen.

Operator

I now, reached have the and session. like conference would over Murstein, question-and-answer we Q&A President the closing Mr. Thank End end for of gentlemen, you. of comments. to to Ladies And the turn Andrew

Andrew Murstein

joining for again our earnings call. you us on Thank

for do on great. to thank our make everything you call, the company employees For our you

on of those call, are who and this you For investment of Medallion trust. thank you shareholders for your your

always, the you. your last feel free As you supplement, any And questions, our page rest on our of information have Investor to as is our earnings ahead. team. have as section well The the Thank if IR day Relations please great website. contact and contact weekend a of of

Operator

you. Thank has of you your The Thank conference Financial for concluded. Medallion now participation.

You may your lines. disconnect now

Medallion Financial (MFIN) 28 Oct 222022 Q3 Earnings call transcript