Medallion Financial Q3 Margin ‘Highest Ever’
Medallion Financial announced that Q3/14 earnings, or net increase in net assets resulting from operations, were $6.7 million compared to $6.4 million in Q3/13, up $0.3 million or 5%. 2014 nine months earnings, or net increase in net assets resulting from operations, were $20.6 million compared to $19.1 million in the same 2013 period, an increase of $1.5 million or 8%. These earnings increases primarily reflected higher net interest income, Medallion reported.
After tax net investment income in Q3/14 increased to $5.2 million, compared to $4.4 million in Q3/13, up $0.8 million or 18%. For the 2014 nine months, net investment income after income taxes was $12.5 million compared to $8.6 million, an increase of $3.9 million or 45%.
Medallion Bank, Medallion Financial’s unconsolidated wholly-owned portfolio company, had net income of $6.7 million in Q3/14 compared to $5.0 million in Q3/13, an increase of $1.7 million or 34%. In the 2014 nine months, the bank earned $19.3 million compared to $13.0 million in the 2013 period, an increase of $6.3 million or 49%.
Medallion said as the company continues to use Medallion Bank as a primary funding source, it refers more loans to Medallion Bank for origination to take advantage of current short term borrowing rates which are at historically low levels, and which are the company’s least expensive source of funds.
Medallion Financial’s net interest margin was 7.20% in Q3/14 compared to 6.33% in Q3/13, and was 6.51% in the nine months, compared with 5.53% in the 2013 period, primarily reflecting higher levels of interest, recoveries and dividends from Medallion Bank, as well as portfolio growth.
On a combined basis with Medallion Bank, the net interest margin was 7.40% in the quarter and 7.16% in the nine months, compared to 6.96% and 6.55% a year ago, reflecting the continued low cost of funds at the bank, and the bank’s higher-yielding loan portfolio. The increases in the net interest margins demonstrated the strong portfolio earning power of Medallion, and such margins remained at high levels compared to most other financial institutions.
Larry D. Hall, chief financial officer of Medallion Financial, stated, “All the important indicators of our business continue to demonstrate the quality of Medallion’s operations, including continued growth and profitability, very solid credit performance by the portfolio, strong capital levels, abundant liquidity, and an experienced management team.
“On a combined basis with Medallion Bank, there were no medallion loans 90 days or more past due, and for the total combined portfolio, loans 90 days or more past due remained at exceptionally low levels at 0.4%, compared to 0.6% at year end, and to 1.6% a year ago. The taxi industry continues to retain its favored position with the riding public against new market entrants such as ridesharing and car service apps through fast, safe, and reliable service, insured vehicles, licensed drivers, and metered pricing that is consistent at all times of the day. The strong value of our medallion collateral, coupled with management’s conservative underwriting criteria has resulted in a loan to value ratio of our combined medallion loan portfolio at approximately 40%.”
To view the full Medallion Financial news release, click here.