Medallion Financial Corp. Q3 FY2025 earnings call

• Net income was $7.8 million in third quarter of 2025, $11.3 million when excluding nonrecurring $3.5 million charge related to redemption of preferred stock at Medallion Bank. Net interest income grew 6% to $55.7 million. - Redeemed Series F preferred stock at Medallion Bank, which lowered ongoing cost of capital at the bank. - Total loans reached $2.559 billion and loan originations were $427 million. - Consumer lending: recreational loan book 3% growth, home improvement loan book modest decrease. - Commercial segment: new originations $17.5 million, portfolio $135.1 million with average rate 13.71%, equity investments with book value $9.3 million. - Strategic partnership program had fourth straight quarter of over $120 million of originations, reaching $208.4 million this quarter. - Paid quarterly dividend of $0.12 per share, $14.4 million remaining under $40 million repurchase program. - Credit perspective: diversified portfolio, prudent underwriting standards, advanced digital tools for optimization.

Consumer lending is the largest and most profitable business line. Interest income was $74.1 million for the quarter, growing 5%. Within consumer lending, recreational loan book grew 3% to $1.603 billion at September 30, 2025, representing 63% of total loans. Originations were $141.7 million, interest income rose 4% to $53.6 million. Home improvement loan book decreased modestly to $804 million at September 30, 2025, representing 31% of total loans. Originations were $59.7 million. Commercial segment had new originations of $17.5 million during the quarter, portfolio grew to $135.1 million with average interest rate 13.71%. Taxi medallion assets collected $6.1 million of cash during the quarter, resulting in net recoveries and gains of $3.4 million. Net taxi medallion assets declined to $5.1 million, representing less than 0.2% of total assets.

• Plan to bring on 1 or 2 new partners in the next 1 to 2 quarters for strategic partnership program, expecting continued increase in performance. - Expect margin to continue expanding in the coming quarters as currently writing loans at rates above WACC and cost of funds expected to drop. - Positive outlook for loan growth, with expectation of growth closer to previous levels and new home improvement lending team expected to accelerate growth.

• Economic uncertainties which led to increase in allowance for credit loss in commercial and consumer loan portfolios. - Uncertainty regarding recovery opportunities of taxi medallion loans with a majority in New York City. - Potential impact of external factors like government shutdown, but currently no exposure affecting the company as stated.

Q: Anthony, was the operating EPS $0.46 a share?

A: Yes. $0.32 and $0.14 on that $3.5 million charge on the redemption of Medallion Bank Series F preferred stock.

Q: And then were there any loans sold in the quarter?

A: No. Other than within the strategic partnership program, still have fair amount of recreation loans to anticipate selling.

Q: And then I noticed that on the income statement, noncontrolling income increased quarter-over-quarter. And on the balance sheet, noncontrolling interest decreased. Does that relate to the Series F redemption?

A: Yes. Decrease on balance sheet is redemption of Series F, and on income statement broke out the $3.5 million charge.

Q: Given the government shutdown, do you guys have exposure to government employees?

A: No.

Q: First, congrats on the continued growth of the strategic partnership loans. Could you give us some color on how you guys are viewing strategic originations and fees in 2026?

A: Been growing for quite some time, going to try to bring on 1 or 2 new partners in the next 1 to 2 quarters, expecting continued increase in performance.

Q: Can you provide some color on why recreation originations were flat year-over-year and what your outlook is for that segment?

A: Part of it is capital, raised credit standards, and now with ability to use money and leverage with low-cost deposits, expecting accelerated growth in next several quarters.

Q: With the Fed cutting rates yesterday for the second time, how should we be thinking about margins going forward?

A: Trend of margin expansion in Q3 expected to continue, currently writing loans at rates above WACC, cost of funds expected to drop in next couple of quarters, expecting further expansion.

Q: How do you feel about overall loan growth going forward?

A: Pretty positive, should grow closer to previous levels, and new home improvement lending team expected to accelerate growth