MFIN - Earnings call transcript Q3 2024

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Operator

Good day, and welcome to the Medallion Financial Corp.

Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ken Cooper, Investor Relations. Please go ahead.

Ken Cooper

Thank you, and good morning, everyone. Corp.'s Earnings Financial Medallion to Third Call. Quarter Welcome

Murstein, Chief Vice Operating me and today and and Andrew are Executive Joining Officer; President Anthony Financial Officer. Chief President Cutrone,

during meaning of such are Such safe statements made Certain Litigation and to statements. constitute Private risks and uncertainties of could forward-looking differ both are materially subject the results in call XXXX Reform SEC. and release the to statements from filings Act harbor forward-looking risks of known earnings statements unknown and the within described Those made cause that uncertainties the the in pursuant Securities provisions and to press today actual with amended. our as issued our yesterday

the do forward-looking and this The forward-looking date statements of not update these any made we obligation statements. to of call, today undertake as are

is you In find Relations. website visiting addition medallion.com can and on the our third presentation the press our Investor our earnings supplement presentation page. by near to clicking top of release, quarter The

With to Andrew. that, over turn I'll it

Andrew Murstein

per was and morning. per quarter. net by We third again the million in $X.X shareholders. delivered We and you, good our This for $X.XX good of income Thank share executed earnings well strengthening Ken, driven of in of portfolio our $X.XX origination borrowers. loan stability earnings. activity, credit metrics of and quality we delivered share loan net over and of income continued have the Year-to-date, our of $XX million

We results. are extremely with pleased these

profile better this years around since improve the over to with risk payment predictable few targeting We small base stay done is borrower This quality. drive enhanced continued more have we credit and our patterns past and work financial hard stable. believe an our helping in The performance. performance centers results lowers movements

subprime skews more in borrowers, to credit the current the of level while we loan prime portfolio. have been decreasing Our super portfolio prime

longer-term We its be were declining to for believe already the beginning the cost this dropping levels, well rate. could funds is a eventually our we In of Fed's environment. at margin. over time. will strong initial believe of This addition, we our drop, business see We our rate declining with rate further trend current interest move pleased that net good reacts of enhance from as Medallion which should in a drop

Moving strong last Rec of sequentially were new $XXX lending down had quarter second segments. to which year third up included and of our quarter originations. quarter, from another loan the from million expected. XX% as the Originations

the third dips it X beginning most and The selling quarter, for quarter active past the as peak summer the sales second in boat there down is in are as typically but This the season. season. the quarter is of still RV quarter of months

these Importantly, interest have rates. most loans but of competitive high

XX.XX%, Our points one XX rate was just average XX ago basis as XX from interest up year basis a and of from ago. quarter points September

X% segment Our prior over quarter the million. sits home lending and improvement year $XXX now grew at

average year the current of than X.XX% basis recent X is most XX rate prior higher Our above points ago quarter. and basis points a

a same staying part segment XX stable comparable the we this of million We years since like and quarter we repayment average history have gains on track the second receive a equity Our is $XXX segment with record delivering of realizing the lending rate was XX%. at the typically long strong, as over these investments transactions. of and portfolio commercial nearly interest of loan as

commercial this X exposure to entire estate. has reminder, real a portfolio As virtually

allocation. to capital like touch on I'd Finally,

deploying the for returns. focused continue to of with We goal be maximizing intensely overall capital on shareholders

current share million stock $XX of our $X average buyback million authorized remaining price $X.XX the common we at quarter, of plan. an million share over and our still repurchased During have on $XX

increased our that in beginning $X.XX with to payable announce to our pleased are quarterly the dividend XX% we addition, Board November. In has dividend

was reinstated tangible first term. return that it case the sustainable been goal quarter to particularly providing XXXX, our of with shareholders dividend in As is our continues a always the has to our long since be and

dividend have company's We to a time and our which shareholder underscores increased confidence future our now second commitment reinstatement, for value. since in the its

will who insight will Anthony, turn I now some quarter. call the over our that, into With to additional provide

Anthony Cutrone

Thank you, everyone. Andrew. morning, Good

from For the million on portfolio income income to on portfolio as interest new quarter, larger ago and of with year our grew from yield outpaced both $XX.X funds growing and cost quarter our in from the loan interest originations. income loan growth X% grew X% interest the increased net an earned a prior benefiting a a

from down the point ago. Our net quarter, basis interest the and margin from on was X quarter points year for down XX X.XX% basis prior loans gross a

the we average an and an loans at home improvement recreation rate originated at rate loans XX.XX% average During quarter, XX.XX%. of of

to products weighted rates consumer continue current at portfolios. originate both above We of coupons these loan average the

yield Our cost will our after charged near and continue plateaus. for well We loans average increase in remained XX% originations October and coupon XX% to anticipate of rates average improvement on above recreation for that our new funds home loans.

cost of September. of quarter, X.XX% basis on to funds with and deposits points a over same interest that X.XX% of average Medallion ago, The points cost up XX average Our our borrowings XX the average basis during period. the deposits X.XX% was end was at rate year the of from as Bank increasing

or ago. of were home total consumer corresponding million X.XX% million $XXX a from past our $XX originated were outstanding of During year ago a year a year $X basis compared X% of recreation improvement XX the or prior increasing with from from million quarter, ago points and loans as loans. to Consumer $X.X the partnership $XX over loans quarter, increasing million loans, of XX% million Total XX of $XXX XX.XX%. and million days to strategic than $X.X the X.XX% loans yield including loans due billion, more loans, we

in current an compared The to quarter credit medallion $X.X quarter. the $XX.X $X.X the was included $XX.X $XX.X both charge-offs were Net or X.XX% the consumer loss loans, X.XX% a during prior quarter million year of net portfolio specifically from to which quarter, million average Our current quarter second or benefit year. portfolio prior the for is related related to average of million $X.X loan of million prior a the compared in in quarter, year provision $XX.X the provision the growth. in taxi million million the million quarter's for our the increase year to and $XX.X million benefit

year quarter, associated that $XX.X with from Operating were to the the and million attributable expenses the with the the during prior decrease prior quarter, contested proxy. $XX quarter quarter experienced in incurred million quarter experienced from the down prior in million in overwhelmingly costs elevated $XX

shareholders $X.XX related or approximately allowances included For $X.XX share, consumer per the growth. million loan quarter, share was net per income attributable which additional our credit to $X.X to to tied

from value book year $XX.XX was the and net $XX.XX $XX.XX a share, in per XX September Our up prior ago. quarter as of

That your third results. and are covers our quarter questions. happy to Andrew I take now

Operator

first will Ladenburg Nolan Christopher Thalmann. the question And from from come Instructions] [Operator

Christopher Nolan

quarter? the in items nonrecurring Any

Anthony Cutrone

No, it was clean. fairly

Our taxi tend what little million around to medallion quarter. recoveries cash hover $X.X on collected. to elevated a were $X.X see, we normal $X We than typically million a million of

So than that other slightly, increased EPS but nothing that. significant

Christopher Nolan

to fair turning of that And reserve to then I a -- really guess, assessment? it's your function is in that calculation? ratio sort reserves. say a Is it Is so a general, fair

Anthony Cutrone

Yes.

repeat You cut Could just you out second, there that? a Chris. for

Christopher Nolan

a of your CECL? reserve function Yes. ratio Is

Anthony Cutrone

Yes. Yes.

loss picture, an with and experience come will the we historic going at losses up So be big to our look forward appropriate allowance. determine projected what

Christopher Nolan

or going affect Fed other future calculation do a said, ratio of... lower Okay. easing That the easing at does as a that you words, result In expect all? reserve forward

Anthony Cutrone

loss be historical function not experience, I ratio Fed allowance of much delinquencies think and will we would a expect easing. that our so

overall, should Although does forward. lower if the help that consumer delinquencies moving relief the Fed rates gets and

Christopher Nolan

hanging for And the Great. a expect higher-quality client? because you there. asset -- -- going in we guys quality should And yields you're loan lower is are

Anthony Cutrone

so. able to levels origination We've think don't been I our keep high.

average that on originations. below continued particularly think is in I with we've rec, our new coupon And that. XX-ish

increase. that levels see writing similarly, And our to continue we're above we'll at improvement, on home average. So

think during we we in I little lower at wrote what QX. levels did than bit a QX,

and more in improvement rather focused response is credit that we've writing home and those pool than necessarily the line. when terms not type lot credit have of roofs, We on loans reason a down seen about related. of that the of loans loans windows think the being mix we're traditional a and in better the charge-offs you QX. That's that It's

on that it's we've believe new but originations, slightly term. going better more those gotten still less yield than we to long sits at, So perform book what our

Operator

Securities. [Operator The Northland Instructions] next question from Grondahl Mike from is

Mike Grondahl

originations? Congrats on Originations, your why? the quarter. What was And strong. of pretty -- kind for outlook especially what's rec

Anthony Cutrone

we've had Yes, we that where And QX rec, in and QX. the in Typically, particularly of see past. a big again, comes QX. said this amounts then originations, and we in is QX good in

flat, in by to X% it saw little maybe of The ramp again indicative be contraction of So of in last portfolio we wouldn't of expect may will QX about year. stay what QX. to what see The QX shrunk have up starts probably bit QX portfolio similar we next in we year. before to a

Mike Grondahl

going associated through I in would running Got what benefit with of out the the $X.XX? then some the that? the $X.X to but what it. of was EPS And million collections, taxicab you it's back know provision, call

Anthony Cutrone

the into translates about credits of million So bottom $X.X income that the benefit on $X.X million line. the statement

that were quantify million, a just it's But share. you if $X.X high. collections again, So $X.XX

about and quarter quarter out, that about quarter indicative million, was more in, of what generates expect think last we $X.XX. I to was see which $X.X

pennies added of EPS of to the there a because So couple was collections.

probably going the X/X. was was that In of like one on $X.X We hit Typically, hit collection. is larger collections, quarter brought more to million a a the in of of income There $X dollar quarter, income collected XX% statement. statement. all settlement every this normal million it about with

Mike Grondahl

Got it. it. Got

benefit way it other of now? provision, you $XX provision from there helpful. your of million kind And out then also way the the called about to was the core $X.X Okay. Is the growth. $XX with but like million. million the $XX it, call Or think million? right Clearly, $X.X let's going collections, the kind more is million of That's for

Anthony Cutrone

of where amount goes. fair the with economy uncertainty a still There's

the to closer to We'll $XX collect if $XX the could want we than million. normal So run $XX peg I don't it recoveries to to million even or number have continue $XX be million rate. Medallion million, our

So between in there. I think it's somewhere

us year into seasonality. delinquencies That's have with going our to go might QX like We're indications that allowance. we not in slower drastic cause and warning quarters the woods QX so also that signs slower, our we happen. we to Growth going have bolster last any penalty economy seeing We're up. We yet. Again, we be the to this something seeing should of in out to saw is experienced tick won't growth that there. we're not see any

Mike Grondahl

mean, I Fair, fair. to that about sequentially, anticipated? only a the getting down X call but I if feeling the bottom than you know margin? was And yet, then margin of don't closer overall One, a can you we how just two what bottom bp more. kind are you are

Anthony Cutrone

Yes.

almost getting there. I think we're we're --

X-ish, below I slightly think but maybe that, what as we've be. that we bottom below not been to meaningfully think at the looking

QX, in quarter. NIM the the basis point think slightly. I We this increased dropped

I almost think we're there.

with into guess September, funds, costs X-year CD by of CDs leading possibility end down year. I X- interesting cost. saw cost in X the rate the that Our it's terms up baking of and the cut cuts we of Fed cut, in everyone in was the of the Since rate run

has bit. think a I little that expectation waned

seen those up. we've come So back costs

in the current issuances range. are think I X-ish

significantly. or got two ways cut are CDs another our priced to should current levels. But a out at we've bit little go of help rate before So

Mike Grondahl

Got it. $XX you in million. remind And volume, Like lastly, economics of us XQ, the can the million the congrats from that then up million? $XX on fintech on $XX

Andrew Murstein

it it will buy way fund then fintech So a few the a we'll is back they'll send and days to later. works loan typically that a us,

if is We're which no to within credit of in just they happening of period extremely So not case guarantees XX holding done paper there's But ranges, the course, properly, rare, it risk use bps. really that provide XX-hour and anything here. let's there's so. or example them, an

loan, of a XX for the the of take points and as get of float well. couple days fee we'll a we'll basis So

Mike Grondahl

it. Got

X% don't way that think guess, know, I the quarter? million, $XXX,XXX, you $XX made right would that be Is about in it $XXX,XXX. I on So the about to

Andrew Murstein

business, you're making saying or We made that bit of close quarter. it's a way this even growing to breaking It it's that probably just here nice But the nice little to that it's goal that. happens -- a money. in it's is work the

is hope Our this accelerate really to business.

have a to think we're going I quarter. strong fourth very

at and the here. it would a and watched of we how the So kind of the We We it. regulators look the field go would weren't with were work little others late game business just into got sure to how precaution. out comfortable

hired another some in took off ago. a couple now, of the a group bank very So pay And we're we starting a us. steam that space. CEO gaining We it's finally, We've got that's though. to years active good of him for

Mike Grondahl

And follow-up line what the Great. a as that lastly, that, come on to through? P&L just does

Anthony Cutrone

X the It's other that's in -- in X interest XX or basis so we the income. up fee in days the interest loans, on that Andrew's example, the hold income. we -- the And that's points, earn

Operator

next will the question from from And B. Howlett be Matthew Riley.

Matthew Howlett

do are how congrats Look, we leaning thinking shares? forward? keep bump expect towards? and I back to dividend percent every you to dividend capital both? continue want to are obviously ask, Sort bump to year of what you and return? just repurchases. on buying Do want Do continued share you What about you XX-plus just the can going the sort the of wanted

Anthony Cutrone

I we've dividend I that we commit to the always mean said intent think to their return. the shareholders committed our to I I term, annually. think But intent for Yes. a ownership. XX% is we're reward think don't and shareholder want Sure. long to increase Board's

So we're think we're out happy question. don't want $X.XX right now. at it's the I just But we to that ourselves, but ahead of don't get of

Andrew Murstein

increase And opportunistically be is but definitely of a the to to goal to Anthony in front look what add, the to at goal should percentage, said, as is It's us. it. hard, pick

this X% couple with extremely from growth last quarter is prior rates strong the X% So of an quarter. we quarters, had the that of and the

to only that eventually million, will about buyback market opportunity the then jumping give that for stock was $X was will slow, and an small, back the stock. review it buying into us So

look recently. and I all we've between buying we So paying at those stock, X things, dividend all growing, X think X, accomplished success a effectively and in

Matthew Howlett

congratulations surprised said -- a its that. dividend repurchases, I paying what what you said The increase, is getting tangible nice on to is you the close But I more already Yes. I was mean, and so we tangible at that's XX%. by Look, book of were was I you the mean, quarter? of share know book? stock yield, know I GAAP end the book. book think the know real

Anthony Cutrone

Sure.

value is book of But do believe something company. we for tangible the likes value at. So measure our that look we best book that is the understand everyone assessing to

but is book tangible good a of adjusted is. tangible think actually book don't indication value, we So

our deferred for intangible same tax adjust the sits on essentially relates sheet it's that just So calculation. balance We to liability that a goodwill $XX specifically on our million the and assets.

tangible So when comes you to book factor out that in, adjusted $XX.XX.

Matthew Howlett

last what, Wow. That or something? was $X.XX was it quarter

Anthony Cutrone

Yes.

book So same out it quarter, each backing amortization. the that benefit get slightly the of you increases as value more because

Matthew Howlett

That go makes the -- ahead... stock

Andrew Murstein

my $X probably growing or the It's a of top so years been lot. Off head, a it was share. ago,

months, been, So know, have our probably last about $X.XX X years the X billion. pretax over and I earnings don't

add to starting it's So up.

Matthew Howlett

not You're a book. probably discount, trading book, tangible only even but only the one of at the banks GAAP

to for and make see So of shareholders. a repurchases great they're sense, those share lot

want new said rates CD Moving down what, little about currently CD drill the a end the about you have the towards at X-ish quarter? what, just X.X%-ish the to bit. margin, rates and Anthony, are of I

Anthony Cutrone

Yes.

September, So on at the X.XX%. we're end issuances ranging is anywhere CDs. X.XX% weighted from new the our of And X.XX% recently seeing to cost

So it's range. X-ish in that

probably So the XX from current about market. basis away we're points

Matthew Howlett

lending on I what's mean, businesses. mean, -- to I I loan it's Look, putting on is average push wanted the ask direct incredible you're because And things and XX%. to consumer up continuing it's coupons because term? your you're above XX.XX% Yes. what the

that legacy runoff yielding getting from loans, with? you're right, you're replacing lower rec So these

Anthony Cutrone

them on to books the our we overwhelmingly, up terms to write for XX XX loans, Yes. months. XX we stay Realistically, when to I they about up years. write these mean

Matthew Howlett

Wow. Okay.

years, Okay. more I but X okay. was thinking like

So rolling off they're pretty fast.

millions hundred several getting amortization, You're of just right?

Anthony Cutrone

Correct.

Matthew Howlett

On the rec?

Anthony Cutrone

Yes.

Matthew Howlett

to So not rates in here start when if of a or give back you think about mean, -- stay could have I want give -- earlier, we couple having margin, go we to if but guidance, the the mean X% to -- I if you years, lower. I don't we be

Andrew Murstein

that modest. -- going where is has a be. And been those Yes, job would say were very good Anthony -- back the levels. would being publicly at around would it to then saying again. of these on thought and I done kind bottom X% elsewhere get He's been start he up was and down he's it bounce calls predicting we there to that done and going

those that but to up. So to it our would to to happen going back not be up is goal, back overnight, get it It's levels. get

Anthony Cutrone

amount we extended anymore of least should rise not see once our time, it Well, expand. Yes. -- at we funds level, that it's to an start of hit for to NIM cost does going plateaus, that terminal

with to has, the coupon of what Our continue exception currently. it to XX.XX% going book the is rolls current off have

New see are that yield. originations growth in still should so higher, we

why of seeing further to line, down But that's to going that's And we how look prospects to cuts, pricing We right affect get seeing now. ourselves, going don't get comfortable and we're what got to like have our we business. the more ahead the a with that's effect are think us. too at we on and good we've of competitive

Matthew Howlett

Well, on managing and that it cycle. and growing shares, all the portfolio has and on it potential what we margin EPS, through the to has the impact a you're that just expand, buying do But way powerful the -- just implies. this the back math congrats of can you're on

And the fintech one guess last just those on I partnerships.

kind for to loan you going and one. it's you've with a personal fintech deals be are space few do of a you the what interesting how -- Anthony, So you guys really to could obviously I many think? year? do got mean, term. solar, long morph one, I into mean, you Andrew -- this mean, Because have I

Andrew Murstein

add more over to, way. add want could We make to is months to every keep to we got I of business regulators. that skis such and We with ahead one And this strong so. X trick in if very relationship we've mistakes. not think It's it and a or get the the but goal our probably your yourselves wanted is compliance-driven.

those and lot steady or selective to competitors X or the been stumbled getting months have keep a last wins applicants. So slow every so. race. of We're partners, X A We'll a with our year very We've adding of year X lot or the so. over partners.

their of getting looks we're a speak. to now, so lot So

we'll hopefully, add So partners. continue new to on

Matthew Howlett

on Great lift. Great. Well, the quarter. congrats dividend

Operator

gentlemen, like to session. Andrew And concludes turn question-and-answer back any I this conference closing remarks. the for today's would ladies to Murstein and

Andrew Murstein

again Thank you this for joining us morning.

continue pleased be year driving performance and deploying remain look on value, a with focused each with We our results, to and our We our and strong to a closing of shareholder note. on excellence. delivering forward great capital businesses efficiently

As earnings contact please website. our our any if well contact the free page team. you Investor our feel supplement always, Relations on is of to the section IR have as The information as last of questions,

rest great your day. a Have of

Operator

for has conference today's attending The concluded. Thank you presentation.

now may disconnect. You

Medallion Bank (MBNKP) 30 Oct 242024 Q3 Earnings call transcript