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Medallion Bank Reports 2019 Fourth Quarter and Full Year Results

BusinessWire - Thu Jan 30, 8:05AM CST

Medallion Bank (Nasdaq: MBNKP, "the Bank" or the "Company"), an FDIC-insured bank specializing in recreation and home improvement lending announced today its 2019 fourth quarter and full year results. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq:MFIN).

2019 Fourth Quarter Highlights

Net income was $9.2 million, compared to $2.4 million in the prior year periodNet interest income was $27.7 million, compared to $24.4 million in the prior year periodProvision for loan losses was $6.3 million, compared to $11.2 million in the prior year periodNet charge-offs were 3.19% of average loans outstanding, compared to 6.90% in the 2018 quarterTotal assets were $1.20 billion as of December 31, 2019The tier 1 leverage ratio was 19.56% as of December 31, 2019

2019 Full Year Highlights

Net income was $23.0 million, up more than 300% from $5.7 million in the prior year periodReturn on assets was 2.08%, compared to 0.54% in 2018Provision for loan losses was $39.0 million, compared to $50.7 million in the prior yearNet charge-offs were 4.30% of average loans outstanding, compared to 5.60% in 2018The recreation loan portfolio grew 20% in 2019The home improvement loan portfolio grew 35% in 2019The medallion loan portfolio decreased from $153.1 million to $107.7 million, or 30%, during 2019Net interest income was $104.2 million, compared to $98.2 million in the prior year, driven by loan growth in the consumer loan portfolios

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, "The Bank had a productive fourth quarter as we completed our initial public offering of preferred stock on the Nasdaq Capital Market exchange. We will now report our earnings in conjunction with filing our quarterly Call Report. This was the Bank's second straight quarter of net income over $9 million and the most profitable six months in company history, which helped to produce a 2.08% return on assets for the year. Our results reflect consistent performance from our recreation and home improvement lending segments, as we continue to liquidate the remaining medallion loan portfolio. With the $46 million preferred stock offering successfully completed in December, and now with more than $229 million of equity, we are positioned for prudent asset growth."

Recreation Lending Segment

The Bank's recreation loan portfolio was $722.4 million as of December 31, 2019, compared to $599.7 million at December 31, 2018. Net interest income for the fourth quarter was $22.8 million, compared to $20.1 million in the prior year period. Recreation loans were 66.9% of the Bank's loans as of December 31, 2019.

Home Improvement Lending Segment

The Bank's home improvement loan portfolio was $247.6 million as of December 31, 2019, compared to $183.5 million at December 31, 2018. Net interest income for the fourth quarter was $4.5 million, compared to $3.4 million in the prior year period. Home improvement loans were 22.9% of the Bank's loans receivable as of December 31, 2019.

Medallion Lending Segment

The Banks's medallion loan portfolio was $107.7 million as of December 31, 2019, compared to $153.1 million at December 31, 2018. Medallion loan delinquencies 90 days or more past due were $0.3 million as of December 31, 2019, compared to $14.2 million at December 31, 2018. Medallion loan delinquencies 30 days or more past due were $10.3 million as of December 31, 2019, compared to $20.5 million at December 31, 2018. The medallion loan portfolio provision for loan losses was $9.7 million in 2019 compared to $30.6 million in 2018. Medallion loans were 9.0% of the Bank's total assets as of December 31, 2019, compared to 15.0% at December 31, 2018.

About Medallion Bank

Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City, Utah. Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats, and home improvements. Medallion Bank is a wholly owned subsidiary of Medallion Financial Corp., a finance company that originates and services loans in various industries.

Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, costs, sales, net investment income, earnings, and growth. These statements are often, but not always, made through the use of words or phrases such as "will" and "continue" or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These statements relate to future public announcements of our earnings, expectations regarding medallion loan portfolio liquidation and the potential for future asset growth. Medallion Bank's actual results may differ significantly from the results discussed in such forward-looking statements. In addition, Medallion Bank's financial results for any period are not necessarily indicative of Medallion Financial Corp.'s results for the same period. For a description of certain risks to which Medallion Bank is or may be subject, please refer to the factors discussed under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" included in the offering circular attached as Exhibit 99.1 to Medallion Bank's Form 10 filed with the FDIC. The Bank's Form 10 and other FDIC filings are available in the Investor Relations section of the Bank's website.

MEDALLION BANK
                                                                                                                       STATEMENTS OF INCOME
                                                                                                                            (UNAUDITED)
                                                                                                                          
           For the Three Months Ended December 31                                          For the Three Months Ended December 31                                                                     Year Ended December 31
------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                          2019       2018        2019        2018   
------------------------------------------------------------ -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Total interest income                                                           $ 33,846                      $ 29,406                      $ 126,723                      $ 116,073  
Total interest expense                                          6,112      4,965      22,521      17,844  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Net interest income                                            27,734     24,441     104,202      98,229  
                                                                                                                                      
Provision for loan losses                                       6,349     11,224      39,050      50,673  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Net interest income after provision for loan losses            21,385     13,217      65,152      47,556  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
                                                                                                                                      
Other income (loss)
                                                                             (134   (134 )                                  (1,791 (1,791 )                                  (2,543  (2,543 )                                 (12,590 (12,590 )
    Write-downs of loan collateral in process of foreclosure
    Gain on sale of loans                                           -          -           -       2,914  
    Other non-interest income                                      17         27         305         237  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Total non-interest income (loss), net                            (117 )                      (1,764 )                       (2,238 )                       (9,439 )
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
                                                                                                                                      
Non-interest expense
    Loan servicing                                              2,725      2,527      10,610      10,211  
    Salaries and benefits                                       2,259      1,941       8,806       7,709  
    Collection costs                                            1,636      1,241       5,519       4,282  
    Professional fees                                             770        362       2,722       1,312  
    Regulatory fees                                               526        574       1,722       2,349  
    Occupancy and equipment                                       173        162         576         565  
    Other                                                         832        (74 )                        3,527       2,451  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Total non-interest expense                                      8,921      6,733      33,482      28,879  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
                                                                                                                                      
Income before income taxes                                     12,347      4,720      29,432       9,238  
Provision for income taxes                                      3,119      2,298       6,457       3,572  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
                                                                                                                                      
Net income                                                                      $  9,228                      $  2,422                      $  22,975                      $   5,666  
                                                             -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
MEDALLION BANK
                                                                           BALANCE SHEETS
                                                                             (UNAUDITED)
                                                                           
(Dollars in thousands)                                                        December 31, 2019                                   December 31, 2018
----------------------------------------------------------- --------------------------------------------------------------------------------------------------------
Assets
    Cash and federal funds sold                                                $    50,237                      $    33,995  
    Investment securities, available-for-sale                    48,998        45,324  
    Loans, inclusive of net deferred loan acquisition costs   1,079,553       938,222  
    Allowance for loan losses                                   (56,443                    )     (60,137                    )
                                                            -------------------- --------- -------------------- -------------------- --------- --------------------
    Loans, net                                                1,023,110       878,085  
    Loan collateral in process of foreclosure                    30,639        28,723  
    Fixed assets and right-of-use assets, net                     3,852           513  
    Deferred tax assets                                          10,506        11,648  
    Accrued interest receivable and other assets                 28,417        24,224  
                                                            -------------------- --------- -------------------- -------------------- --------- --------------------
Total assets                                                                   $ 1,195,759                      $ 1,022,512  
                                                            -------------------- --------- -------------------- -------------------- --------- --------------------
                                                                           
Liabilities and Shareholders' Equity
    Funds borrowed                                                             $   951,651                      $   848,040  
    Accrued interest payable                                      2,096         1,730  
    Income taxes payable                                          2,144                                        --
    Other liabilities                                             9,308         5,476  
    Due to affiliates                                             1,041           271  
                                                            -------------------- --------- -------------------- -------------------- --------- --------------------
Total liabilities                                               966,240       855,517  
                                                            -------------------- --------- -------------------- -------------------- --------- --------------------
                                                                           
----------------------------------------------------------- --------------------------------------------------------------------------------------------------------
Total shareholders' equity                                      229,519       166,995  
                                                            -------------------- --------- -------------------- -------------------- --------- --------------------
Total liabilities and shareholder' equity                                      $ 1,195,759                      $ 1,022,512  
                                                            ==================== ========= ==================== ==================== ========= ====================

View source version on businesswire.com: https://www.businesswire.com/news/home/20200130005156/en/

SOURCE: Medallion Bank

Alex E. Arzeno
Investor Relations
212-328-2168
InvestorRelations@medallion.com

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