Medallion Financial Corp. Announces First Quarter Earnings
- Income Continues to increase - Parent Company debt repaid - Dividend declared - New NYC Taxi Medallions a possibility
NEW YORK, May 8 -- Medallion Financial Corp. , a specialty finance company with a leading position in servicing the taxi industry, small business commercial lending, and owner of the largest taxi top advertising company in the world, announced earnings for the 2003 first quarter of $430,000 or $.02 per share, compared to a profit of $188,000 or $0.01 per share for the 2002 fourth quarter, and compared to a loss of $1,409,000 or $(.08) per share for the 2002 first quarter.
Andrew Murstein, President of Medallion Financial stated, "We are very pleased with our first quarter results and the direction in which our Company is heading. This marks the second consecutive quarter of profitability since we refinanced the majority of our debt in September 2002 with Merrill Lynch Bank USA. We are increasing our loan activity and outstandings, specifically in the taxi medallion area for the first time in a while. With liquidity constraints clearly behind us, we feel unshackled and very well positioned for future growth."
Mr. Murstein continued, "We are delighted and very proud to announce that we have successfully paid off all of our old bank group debt by our parent company. This was accomplished far ahead of schedule, as the last scheduled payments were not due until August, 2003."
Total medallion loans increased to $230,097,000 in the first quarter of 2003 from $210,476,000 in the fourth quarter of 2002. Mr. Murstein commented, "We see this growth trend continuing. It is reflective of our new financing facility, and our continued leadership in this industry that we were able to accomplish this while amortizing the bank and noteholder debt. On the commercial side, our loan syndication and participation programs continue to work well as many banks are interested in participating in the loans that we generate because of their excellent quality. We typically participate these loans out at a lower rate and charge servicing fees, increasing our overall yields and overall returns."
Larry Hall, Medallion's Chief Accounting Officer stated, "Every lending division under the Medallion Financial umbrella did well in the quarter and has continued to show improvement over the last year. The only area that did not perform up to its potential was our Media division. While several of our major taxi top cities such as New York continue to perform well, we are not doing as well in certain of our smaller markets, such as Newark and Cleveland. As a result, we will focus in the coming months on pulling back from those cities that have not attained their performance goals and concentrate instead on our larger better performing markets."
Mr. Hall continued, "The balance sheet continues to improve. Between our new Merrill Lynch facility, the Small Business Administration commitments that we have not drawn upon, and our cash on hand, we currently have almost $144,000,000 available to grow our portfolio net of the Company's contribution. If we are successfully able to utilize this availability, we could significantly increase our portfolio by over 40%. We have also locked in some of our debt at very attractive rates. We recently drew down 10 year fixed rate money from the SBA at rates as low as 5.6%, thus locking in long-term money at historically low rates. At March 31, 2003, we had $30,725,792 of cash on hand, so we remain highly liquid. Over the last two years, we have paid off our old bank and noteholder debt commitment by almost $370 million. Our debt to equity ratio is now at 1.48 to 1, and our capital ratio is 39%, both evidencing our solid capital base and allowing the opportunity for appropriate growth."
James E. Jack, Executive Vice President and Chief Financial Officer stated, "Loan quality continued to remain strong and is what we feel is one of the hallmarks of Medallion Financial. Delinquencies greater than 90 days past due remained relatively flat from the prior quarter, and showed an improvement of $12,204,000 or 29% from a year ago. As the following table illustrates, our net interest margin has also increased."
1st Qtr. 2003 4th Qtr. 2002 Yield 7.33% 8.07% Cost of funds 3.70 4.67 Net interest margin 3.63% 3.40%
The Company also announced that its Board of Directors declared a dividend on its common stock for the 2003 first quarter. The Board declared a dividend of $.01 per share to shareholders of record on May 16th, payable on May 27th.
Mr. Jack continued, "As our earnings improve, we continue to build momentum, and we execute our strategies with emphasis on shareholder value, we hope to increase the dividend throughout the balance of this year and into the years ahead."
Mr. Murstein concluded, "The City and State of New York are currently considering issuing up to 900 new taxi medallions. This would be the second time in over 60 years that the City approved the issuance of additional medallions. During the last auction, the City sold medallions over a period of three years in a well-thought-out auction process. During that auction period, medallion prices were bid up. Over the last 18 months, medallion prices have continued to increase from a low of about $195,000 for a corporate medallion just after September 11, 2001, to a current high of over $260,000.
We believe that the City and State's plan to issue new medallions will have a further positive effect on the medallion prices and presents a strategic business opportunity for Medallion Financial. In the last auction we financed many of the winning bidders, and we would also expect to do the same this time around. The total proceeds to the City of the medallion auction, which could start by the end of this year, are estimated to be more than $200,000,000 at current values. We expect that our share of this loan activity would further improve our profits and be accretive to our earnings."
Medallion Financial Corp. is a specialty finance company with a leading position in the origination and servicing of loans financing the purchase of taxicab medallions and related assets. The Company also originates and services commercial loans financing small businesses in other targeted industries, and operates the largest taxicab rooftop advertising business in the world. The Company and its subsidiaries have lent over $1 billion to the taxicab industry and commercial equipment 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. Medallion's actual results may differ significantly from the results discussed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those factors discussed under the heading "Investment Considerations," in Medallion's 2002 Annual Report on Form 10-K.
Medallion Financial Corp.
Consolidated Balance Sheets
March 31, December 31,
2003 2002
ASSETS
Medallion loans $230,097,124 $210,475,921
Commercial loans 114,412,457 138,360,895
Equity investments 8,985,448 7,409,628
Net investments 353,495,029 356,246,444
Investments in and loans to Media 3,749,195 4,505,356
Total investments 357,244,224 360,751,800
Cash 30,725,792 35,369,285
Accrued interest receivable 2,022,198 2,546,101
Servicing fee receivable 2,968,081 2,838,417
Fixed assets, net 1,487,773 1,551,781
Goodwill, net 5,007,583 5,007,583
Other assets 14,624,700 17,222,825
Total assets $414,080,351 $425,287,792
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $6,930,864 $7,066,118
Accrued interest payable 4,418,257 5,589,754
Revolving line of credit 161,270,760 132,589,899
Notes payable to banks 11,236,800 48,018,589
Senior secured notes 83,970 2,313,753
SBA debentures 67,845,000 67,845,000
Total liabilities 251,785,651 263,423,113
Total shareholders' equity 162,294,700 161,864,679
Total liabilities and shareholders' equity $414,080,351 $425,287,792
Number of common shares outstanding 18,242,728 18,242,728
Net asset value per share $ 8.90 $ 8.87
Medallion Financial Corp.
Consolidated Income Statements
Quarter Ended March 31,
2003 2002
Total investment income $6,528,284 $9,778,912
Total interest expense 3,295,139 5,756,553
Net interest income 3,233,145 4,022,359
Gain on sale of loans 188,930 329,627
Other income 1,121,113 891,345
Total noninterest income 1,310,043 1,220,972
Salaries and benefits 2,434,388 2,344,843
Professional fees 119,979 893,238
Other operating expenses 1,683,742 1,766,048
Total operating expenses 4,238,109 5,001,617
Net investment income before income taxes 305,079 241,718
Income tax provision 9,999 0
Net investment income 295,080 241,718
Net realized losses on investments (561,565) (699,633)
Net change in unrealized appreciation
(depreciation) on investments 696,505 (950,901)
Net realized/unrealized gain
(loss) on investments 134,940 (1,650,541)
Net increase (decrease) in net assets
resulting from operations $430,020 $(1,408,827)
Weighted average shares
Basic 18,242,728 18,242,728
Diluted 18,242,728 18,242,728
Net increase (decrease) in net
investment income per share
Basic $0.02 $0.01
Diluted 0.02 0.01
Net increase (decrease) in net assets per share
Basic $0.02 $(0.08)
Diluted 0.02 (0.08)