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Sep 30, 2020
Medallion Q3 2020 Earnings Report
Reported a net loss due to challenges in the medallion segment, offset by growth in consumer and commercial lending.
Key Takeaways
Medallion Financial Corp. reported a net loss of $23.6 million for the third quarter of 2020, primarily due to losses in the medallion segment impacted by COVID-19. However, the consumer and commercial lending segments saw record net income, and total assets remained strong at $1.6 billion.
Net loss was $23.6 million, or $0.97 per share, compared to net income of $5.0 million, or $0.20 per share, in the prior year quarter.
The medallion segment lost nearly $36 million due to the impact of COVID-19.
Net interest income increased 15% to $29.1 million, driven by consumer lending segments.
Net income from consumer and commercial lending segments increased 41% to a record $14.1 million.
Medallion
Medallion
Medallion Revenue by Segment
Revenue by Segment
Consumer Lending Revenue
CapyFin.comCommercial Lending Revenue
CapyFin.com Forward Guidance
The Company took steps to effectively put the taxi medallion loan portfolio behind and will focus on collection and recovery efforts. Consumer payment deferrals from the second quarter were largely resolved in the third quarter.
Positive Outlook
- Received a $3.8 million payment from a large medallion borrower subsequent to quarter end which will reduce their corresponding loan reserves.
- Demand for recreation and home improvement loans remained robust.
- Medallion Bank stayed the course with tightened underwriting criteria in a rather unpredictable economic environment while still allowing our consumer portfolio to grow substantially.
- Consumer payment deferrals from the second quarter were largely resolved in the third quarter.
- Medallion Bank remains well-positioned to continue to grow and meet the increased demand.
Challenges Ahead
- The COVID-19 pandemic continued to have an impact on the New York City taxi industry.
- All medallion loans were deemed as impaired, placed them on non-accrual.
- Lowered our collateral value from $119,500 net to $90,300 net in New York City, leading to a substantial increase in specific reserves.
- Recoveries will remain unpredictable for the foreseeable future.
- Any future losses incurred by collateral values being lowered will be manageable, and have a minimal impact on future results of operations.