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☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number
001-37747
MEDALLION FINANCIAL CORP
.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
04-3291176
(State of Incorporation)
(IRS Employer
Identification No.)
437 MADISON AVENUE, 38
th
Floor
NEW YORK
,
New York
10022
(Address of Principal Executive Offices) (Zip Code)
(
212
)
328-2100
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbols
Name of each exchange
on which registered
Common Stock, par value $0.01 per share
MFIN
NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
☒
The number of outstanding shares of registrant’s Common Stock, par value $0.01, as of November 3, 2025,
was
23,279,435
.
The following discussion should be read in conjunction with our financial statements and the notes to those statements and other financial information appearing elsewhere in this report.
This report contains forward-looking statements relating to future events and future performance applicable to us within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions, or future strategies that are signified by the words expects, anticipates, intends, believes, or similar language. In connection with certain forward-looking statements contained in this Form 10-Q and those that may be made in the future by or on behalf of the Company, the Company notes that there are various factors that could cause actual results to differ materially from those set forth in any such forward-looking statements. The forward-looking statements contained in this Form 10-Q were prepared by management and are qualified by, and subject to, significant business, economic, competitive, regulatory, and other uncertainties and contingencies, including those relating to the U.S. and global economies, including the current inflationary environment, the impact of tariffs and the risk of recession, all of which are difficult or impossible to predict, and many of which are beyond control of the Company.
All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statements. The statements have not been audited by, examined by, compiled by, or subjected to agreed-upon procedures by independent accountants, and no third-party has independently verified or reviewed such statements. Readers of this Form 10-Q should consider these facts in evaluating the information contained herein. In addition, the business and operations of the Company are subject to substantial risks which increase the uncertainty inherent in the forward-looking statements contained in this Form 10-Q. The inclusion of the forward-looking statements contained in this Form 10-Q should not be regarded as a representation by the Company or any other person that the forward-looking statements contained in this Form 10-Q will be achieved.
In light of the foregoing, readers of this Form 10-Q are cautioned not to place undue reliance on the forward-looking statements contained herein. You should consider these risks and those described under Risk Factors in the Company’s Annual Report on Form 10-K and others that are detailed in the other reports that the Company files from time to time with the SEC.
Page
2
of 66
PART I – FINANCI
AL INFORMATION
ITEM 1. FINANCI
AL STATEMENTS
BASIS OF PREPARATION
We, Medallion Financial Corp., or the Company, are a specialty finance company organized as a Delaware corporation. Our strategic focus is growing our consumer finance and commercial lending businesses. Our total assets were $2.90 billion and $2.87 billion as of September 30, 2025 and December 31, 2024.
We conduct our business through various wholly-owned subsidiaries including:
•
Medallion Bank, or the Bank, a Federal Deposit Insurance Corporation, or FDIC, insured industrial bank that originates consumer loans, raises deposits and conducts other banking activities;
•
Medallion Capital, Inc., or Medallion Capital, a Small Business Investment Company, or SBIC, which operates a mezzanine financing business;
•
Medallion Funding LLC, or Medallion Funding, an SBIC, historically our primary taxi medallion lending company; and
•
Freshstart Venture Capital Corp., or Freshstart, which historically originated and serviced taxi medallion and commercial loans and was an SBIC through 2023.
Our consolidated balance sheets as of September 30, 2025, and the related consolidated statements of operations, consolidated statements of other comprehensive income, consolidated statements of stockholders’ equity and cash flows for the three and nine months then ended included in Item 1 have been prepared by us, without audit, pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying consolidated financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly our consolidated financial position and results of operations. The results of operations for the three and nine months ended September 30, 2025 may not be indicative of future performance. These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Page
3
of 66
MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
September 30, 2025
December 31, 2024
Assets
Cash and cash equivalents
$
72,461
$
98,238
Federal funds sold
78,517
71,334
Investment securities
61,081
54,805
Equity investments
9,305
9,198
Loans held for sale, at lower of amortized cost or fair value
72,918
128,226
Loans
2,486,163
2,362,796
Allowance for credit losses
(
111,053
)
(
97,368
)
Net loans receivable
2,375,110
2,265,428
Goodwill
150,803
150,803
Intangible assets, net
18,063
19,146
Property, equipment, and right-of-use lease asset, net
10,839
13,756
Accrued interest receivable
16,973
15,314
Loan collateral in process of foreclosure
8,235
9,932
Income tax receivable
—
2,131
Other assets
26,082
30,295
Total assets
$
2,900,387
$
2,868,606
Liabilities
Deposits
(1)
$
2,055,802
$
2,090,071
Long-term debt
(2)
215,698
232,159
Short-term debt
80,250
49,000
Deferred tax liabilities, net
(3)
19,019
20,995
Operating lease liabilities
3,459
5,128
Accrued interest payable
5,290
8,231
Income tax payable
2,875
—
Accounts payable and accrued expenses
(4)
21,117
24,064
Total liabilities
2,403,510
2,429,648
Commitments and contingencies
(5)
Stockholders’ equity
Preferred stock (
1,000,000
shares of $
0.01
par value stock authorized-
none
outstanding)
—
—
Common stock (
50,000,000
shares of $
0.01
par value stock authorized -
29,560,344
shares at September 30, 2025
and
29,308,182
shares at December 31, 2024 issued)
296
293
Additional paid in capital
297,730
293,412
Treasury stock (
6,280,909
shares at September 30, 2025
and
6,172,558
shares at December 31, 2024)
(
51,130
)
(
50,144
)
Accumulated other comprehensive loss
(
2,416
)
(
3,647
)
Retained earnings
152,968
130,256
Total stockholders’ equity
397,448
370,170
Non-controlling interest in consolidated subsidiaries
99,429
68,788
Total equity
496,877
438,958
Total liabilities and equity
$
2,900,387
$
2,868,606
Number of common shares outstanding
23,279,435
23,135,624
Book value per common share
$
17.07
$
16.00
(1)
Includes
$
5.5
million
and
$
4.6
million
of deferred financing costs as of September 30, 2025 and December 31, 2024
. Refer to Note 5 for more details.
(2)
Includes
$
3.6
million
of deferred financing costs as of both September 30, 2025 and December 31, 2024
. Refer to Note 5 for more details.
(3)
Includes $
42.5
million and $
42.8
million of deferred tax liabilities related to goodwill and intangible assets as of
September 30, 2025 and December 31, 2024.
Refer to Note 7 for more details.
(4)
Includes the short-term portion of lease liabilities of
$
2.3
million
as of both September 30, 2025 and December 31, 2024
. Refer to Note 6 for more details.
(5)
Refer to Note 10 for more details.
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page
4
of 66
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)
2025
2024
2025
2024
Interest and fees on loans
$
78,934
$
74,538
$
228,198
$
208,620
Non-loan interest and dividend income
1,837
1,871
5,439
5,563
Total interest income
80,771
76,409
233,637
214,183
Interest on deposits
20,502
19,191
59,725
50,466
Interest on long-term debt
3,870
4,356
11,294
12,793
Interest on short-term borrowings
713
125
2,151
402
Total interest expense
25,085
23,672
73,170
63,661
Net interest income
55,686
52,737
160,467
150,522
Provision for credit losses
18,556
20,151
62,132
55,929
Net interest income after provision for credit losses
37,130
32,586
98,335
94,593
Other income
Gain (loss) on equity investments, net
257
(
519
)
15,783
3,136
Gain on taxi medallion assets, net
1,767
340
3,359
1,170
Strategic partnership fees
990
400
2,461
1,206
Gain on sale of recreation loans held for sale
—
—
1,304
—
Other income
34
366
951
1,577
Total other income, net
3,048
587
23,858
7,089
Other expenses
Salaries and employee benefits
10,145
9,456
30,286
28,347
Loan servicing fees
2,852
2,790
8,568
7,951
Collection costs
1,660
1,673
4,947
4,799
Professional fee costs, net
1,073
818
4,010
3,434
Regulatory fees
680
961
2,610
2,826
Rent expense
680
664
2,036
2,019
Amortization of intangible assets
361
361
1,084
1,084
Other expenses
3,251
2,272
9,465
6,755
Total other expenses
20,702
18,995
63,006
57,215
Income before income taxes
19,476
14,178
59,187
44,467
Income tax provision
5,862
4,055
18,380
14,196
Net income after taxes
13,614
10,123
40,807
30,271
Less: income attributable to the non-controlling interest
2,336
1,512
6,446
4,535
Less: redemption of non-controlling interest
3,515
—
3,515
—
Net income attributable to Medallion Financial Corp. Stockholders
$
7,763
$
8,611
$
30,846
$
25,736
Basic earnings per share
$
0.34
$
0.38
$
1.36
$
1.14
Diluted earnings per share
$
0.32
$
0.37
$
1.28
$
1.09
Weighted average common shares outstanding
Basic
22,854,836
22,490,792
22,737,572
22,576,446
Diluted
24,437,133
23,447,929
24,131,840
23,555,065
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page
5
of 66
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Net income after taxes
$
13,614
$
10,123
$
40,807
$
30,271
Other comprehensive income, net of tax
682
1,497
1,231
1,449
Total comprehensive income
14,296
11,620
42,038
31,720
Less: income attributable to the non-controlling interest
2,336
1,512
6,446
4,535
Less: redemption of non-controlling interest
3,515
—
3,515
—
Total comprehensive income attributable to Medallion Financial Corp.
$
8,445
$
10,108
$
32,077
$
27,185
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page
6
of 66
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(Dollars in thousands)
Common
Stock Shares
Common
Stock
Additional
Paid In
Capital
Treasury
Stock Shares
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
Non-
controlling
Interest
Total
Equity
Balance at December 31, 2024
29,308,182
$
293
$
293,412
(
6,172,558
)
$
(
50,144
)
$
130,256
$
(
3,647
)
$
370,170
$
68,788
$
438,958
Net income
—
—
—
—
—
12,014
—
12,014
1,512
13,526
Distributions to non-controlling interest
—
—
—
—
—
—
—
—
(
1,512
)
(
1,512
)
Stock-based compensation expense
—
2
1,686
—
—
—
—
1,688
—
1,688
Exercise of stock options
265
—
1
—
—
—
—
1
—
1
Issuance of restricted stock, net
307,059
—
—
—
—
—
—
—
—
—
Withheld restricted stock for employees' tax obligations
(
144,360
)
—
(
1,202
)
—
—
—
—
(
1,202
)
—
(
1,202
)
Forfeiture of restricted stock, net
(
3,373
)
—
—
—
—
—
—
—
—
—
Purchase of common stock
—
—
—
(
60,185
)
(
531
)
—
—
(
531
)
—
(
531
)
Dividends paid on common stock
—
—
—
—
—
(
2,554
)
—
(
2,554
)
—
(
2,554
)
Other comprehensive income, net of tax
—
—
—
—
—
—
638
638
—
638
Balance at March 31, 2025
29,467,773
$
295
$
293,897
(
6,232,743
)
$
(
50,675
)
$
139,716
$
(
3,009
)
$
380,224
$
68,788
$
449,012
Net income
—
—
—
—
—
11,069
—
11,069
2,598
13,667
Distributions to non-controlling interest
—
—
—
—
—
—
—
—
(
1,843
)
(
1,843
)
Non-controlling interest equity raised by Medallion Bank
—
—
—
—
—
—
—
—
73,126
73,126
Stock-based compensation expense
—
—
1,681
—
—
—
—
1,681
—
1,681
Exercise of stock options
41,061
—
256
—
—
—
—
256
—
256
Forfeiture of restricted stock, net
(
476
)
—
—
—
—
—
—
—
—
—
Issuance in connection with vesting of restricted stock units
19,144
—
—
—
—
—
—
—
—
—
Purchase of common stock
—
—
—
(
48,166
)
(
455
)
—
—
(
455
)
—
(
455
)
Dividends paid on common stock
—
—
—
—
—
(
2,790
)
—
(
2,790
)
—
(
2,790
)
Other comprehensive loss, net of tax
—
—
—
—
—
—
(
89
)
(
89
)
—
(
89
)
Balance at June 30, 2025
29,527,502
$
295
$
295,834
(
6,280,909
)
$
(
51,130
)
$
147,995
$
(
3,098
)
$
389,896
$
142,669
$
532,565
Net income
—
—
—
—
—
11,278
—
11,278
2,336
13,614
Distributions to non-controlling interest
—
—
—
—
—
—
—
—
(
3,091
)
(
3,091
)
Non-controlling interest redemption at Medallion Bank
—
—
—
—
—
(
3,515
)
—
(
3,515
)
(
42,485
)
(
46,000
)
Stock-based compensation expense
—
—
1,687
—
—
—
—
1,687
—
1,687
Exercise of stock options
32,842
1
209
—
—
—
—
210
—
210
Dividends paid on common stock
—
—
—
—
—
(
2,790
)
—
(
2,790
)
—
(
2,790
)
Other comprehensive income, net of tax
—
—
—
—
—
—
682
682
—
682
Balance at September 30, 2025
29,560,344
$
296
$
297,730
(
6,280,909
)
$
(
51,130
)
$
152,968
$
(
2,416
)
$
397,448
$
99,429
$
496,877
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page
7
of 66
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(Dollars in thousands)
Common
Stock Shares
Common
Stock
Additional
Paid In
Capital
Treasury
Stock Shares
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
Non-
controlling
Interest
Total
Equity
Balance at December 31, 2023
29,051,800
$
291
$
288,046
(
5,602,154
)
$
(
45,538
)
$
103,883
$
(
3,696
)
$
342,986
$
68,788
$
411,774
Net income
—
—
—
—
—
10,024
—
10,024
1,512
11,536
Distributions to non-controlling interest
—
—
—
—
—
—
—
—
(
1,512
)
(
1,512
)
Stock-based compensation expense
—
1
1,495
—
—
—
—
1,496
—
1,496
Issuance of restricted stock, net
296,178
—
—
—
—
—
—
—
—
—
Withheld restricted stock for employees' tax obligations
(
116,275
)
—
(
944
)
—
—
—
—
(
944
)
—
(
944
)
Forfeiture of restricted stock, net
(
1,208
)
—
—
—
—
—
—
—
—
—
Exercise of stock options
13,383
—
88
—
—
—
—
88
—
88
Purchase of common stock
—
—
—
(
264,160
)
(
2,126
)
—
—
(
2,126
)
—
(
2,126
)
Dividends paid on common stock
—
—
—
—
—
(
2,338
)
—
(
2,338
)
—
(
2,338
)
Other comprehensive loss, net of tax
—
—
—
—
—
—
(
150
)
(
150
)
—
(
150
)
Balance at March 31, 2024
29,243,878
$
292
$
288,685
(
5,866,314
)
$
(
47,664
)
$
111,569
$
(
3,846
)
$
349,036
$
68,788
$
417,824
Net income
—
—
—
—
—
7,101
—
7,101
1,512
8,613
Distributions to non-controlling interest
—
—
—
—
—
—
—
—
(
1,512
)
(
1,512
)
Stock-based compensation expense
—
1
1,595
—
—
—
—
1,596
—
1,596
Exercise of stock options
2,867
—
18
—
—
—
—
18
—
18
Forfeiture of restricted stock, net
(
1,696
)
—
—
—
—
—
—
—
—
—
Issuance in connection with vesting of restricted stock units
17,155
—
—
—
—
—
—
—
—
—
Purchase of common stock
—
—
—
(
183,900
)
(
1,515
)
—
—
(
1,515
)
—
(
1,515
)
Dividends paid on common stock
—
—
—
—
—
(
2,337
)
—
(
2,337
)
—
(
2,337
)
Other comprehensive income, net of tax
—
—
—
—
—
—
102
102
—
102
Balance at June 30, 2024
29,262,204
$
293
$
290,298
(
6,050,214
)
$
(
49,179
)
$
116,333
$
(
3,744
)
$
354,001
$
68,788
$
422,789
Net income
—
—
—
—
—
8,611
—
8,611
1,512
10,123
Distributions to non-controlling interest
—
—
—
—
—
—
—
—
(
1,512
)
(
1,512
)
Stock-based compensation expense
—
—
1,509
—
—
—
—
1,509
—
1,509
Exercise of stock options
5,852
—
38
—
—
—
—
38
—
38
Forfeiture of restricted stock, net
(
11,221
)
—
—
—
—
—
—
—
—
—
Purchase of common stock
—
—
—
(
122,344
)
(
965
)
—
—
(
965
)
—
(
965
)
Dividends paid on common stock
—
—
—
—
—
(
2,303
)
—
(
2,303
)
—
(
2,303
)
Other comprehensive income, net of tax
—
—
—
—
—
—
1,497
1,497
—
1,497
Balance at September 30, 2024
29,256,835
$
293
$
291,845
(
6,172,558
)
$
(
50,144
)
$
122,641
$
(
2,247
)
$
362,388
$
68,788
$
431,176
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page
8
of 66
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income resulting from operations
$
40,807
$
30,271
Adjustments to reconcile net income resulting from operations to net cash provided by operating activities:
Provision for credit losses
62,132
55,929
Proceeds from sales of strategic partnership loans held for sale
505,338
77,312
Origination of strategic partnership loans held for sale
(
513,229
)
(
79,952
)
Paid-in-kind interest income
(
802
)
(
1,910
)
Depreciation and amortization
6,265
4,365
Amortization of loan origination costs and fees, net
7,640
6,628
Increase in deferred and other tax liabilities, net
3,030
294
Net change in value of loan collateral in process of foreclosure
—
(
98
)
Net gains on investments
(
15,783
)
(
3,136
)
Stock-based compensation expense
5,056
4,601
Increase in accrued interest receivable
(
1,659
)
(
570
)
Increase (decrease) in other assets
1,146
(
3,431
)
Decrease in accounts payable and accrued expenses
(
4,485
)
(
5,861
)
(Decrease) increase in accrued interest payable
(
2,941
)
66
Net cash provided by operating activities
92,515
84,508
CASH FLOWS FROM INVESTING ACTIVITIES
Loans originated
(
583,301
)
(
691,549
)
Proceeds from principal receipts, sales, and maturities of loans
459,494
369,553
Purchases of investments
(
14,758
)
(
6,191
)
Proceeds from principal receipts, sales, and maturities of investments
25,363
9,810
Proceeds from the sale and principal payments on loan collateral in process of foreclosure
10,051
9,931
Net cash used for investing activities
(
103,151
)
(
308,446
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from time deposits and funds borrowed
1,368,824
1,027,961
Repayments of time deposits and funds borrowed
(
1,387,476
)
(
749,047
)
Non-controlling interest equity raised by Medallion Bank
73,126
—
Non-controlling interest redemption at Medallion Bank
(
46,000
)
—
Cash dividends paid on common stock
(
8,265
)
(
6,951
)
Distributions to non-controlling interests
(
6,446
)
(
4,535
)
Payment of withholding taxes on net settlement of vested stock
(
1,202
)
(
944
)
Treasury stock repurchased
(
986
)
(
4,606
)
Proceeds from the exercise of stock options
467
144
Net cash (used in) provided by financing activities
(
7,958
)
262,022
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(
18,594
)
38,084
Cash and cash equivalents, beginning of period
(1)
169,572
149,845
Cash and cash equivalents, end of period
(1)
$
150,978
$
187,929
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest
$
72,826
$
60,631
Cash paid during the period for income taxes
15,616
14,227
NON-CASH INVESTING
Loans transferred to loan collateral in process of foreclosure, net
$
22,324
$
17,703
(1)
Includes federal funds sold.
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page
9
of 66
MEDALLION FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2025
(1) ORGANIZATION OF MEDALLION FINANCIAL CORP. AND ITS SUBSIDIARIES
Medallion Financial Corp., or the Company, is a specialty finance company organized as a Delaware corporation that reports as a bank holding company, but is not a bank holding company for regulatory purposes. The Company conducts its business through various wholly-owned subsidiaries including its primary operating company, Medallion Bank, or the Bank, a Federal Deposit Insurance Corporation, or FDIC, insured industrial bank that originates consumer loans, raises deposits, and conducts other banking activities. The Bank is subject to competition from other financial institutions and to the regulations of certain federal and state agencies, and undergoes examinations by those agencies. The Bank was formed in May 2002 for the purpose of obtaining an industrial bank charter pursuant to the laws of the State of Utah. The Bank originates consumer loans on a national basis for the purchase of recreational vehicles, or RVs, boats, collector cars, and other consumer recreational equipment and to finance home improvements such as swimming pools, roofs, and windows. Prior to 2015, the Bank originated commercial loans to finance the purchase of taxi medallions, all of which are serviced by the Company. The loans are financed primarily with time certificates of deposit which are originated nationally through a variety of brokered deposit relationships.
The Company also conducts business through its subsidiaries Medallion Capital, Inc., or Medallion Capital, a Small Business Investment Company, or SBIC, which conducts a mezzanine financing business; Medallion Funding LLC, or MFC, an SBIC, which historically was the Company's primary taxi medallion lending company; and Freshstart Venture Capital Corp., or Freshstart, which historically originated and serviced taxi medallion and commercial loans. Medallion Capital and MFC, as SBICs, are regulated by the Small Business Administration, or SBA. Medallion Capital is financed in part by the SBA.
The Company established a wholly-owned subsidiary, Medallion Financing Trust I, or Fin Trust, for the purpose of issuing unsecured trust preferred securities to investors. Fin Trust is a separate legal and corporate entity with its own creditors who, in any liquidation of Fin Trust, will be entitled to be satisfied out of Fin Trust’s assets prior to any value in Fin Trust becoming available to Fin Trust’s equity holders. The assets of Fin Trust, aggre
gating $
34.0
million at
September 30, 2025,
are comprised solely of a subordinated note from the Company and are not available to pay obligations of its affiliates or any other party, and the assets of affiliates or any other party are not available to pay obligations of Fin Trust.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the U.S., or GAAP, requires management to make estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. Accounting estimates and assumptions are those that management considers to be the most critical to an understanding of the consolidated financial statements because they inherently involve significant judgments and uncertainties. All of these estimates reflect management’s best judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. If such conditions change, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of goodwill and intangible assets, and allowance for credit losses, among other effects.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and all of its wholly-owned and controlled subsidiaries. All significant intercompany transactions, balances, and profits (losses) have been eliminated in consolidation.
The consolidated financial statements have been prepared in accordance with GAAP. The Company consolidates all entities it controls thro
ugh a majority voting interest, a controlling interest through other contractual rights, or as being identified as the primary beneficiary of variable interest entities, or VIEs. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third-party’s holding is recorded as non-controlling interest.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents. Cash balances are generally held in accounts at large national or regional banking organizations in amounts that exceed the federally insured limits. Cash also includes
$
0.8
million
of interest-bearing funds deposited in other banks with original terms of
5
to
6
years
that cannot be withdrawn but are salable on an active secondary market without penalty
.
Page
10
of 66
Fair Value of Assets and Liabilities
The Company follows the Financial Accounting Standards Board, or FASB, FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, or FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as an exit price (i.e., a price that would be received to sell, as opposed to acquire, an asset or transfer a liability), and emphasizes that fair value is a market-based measurement. It establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent external sources and the reporting entity’s own assumptions. Further, it specifies that fair value measurement should consider adjustment for risk, such as the risk inherent in the valuation technique or its inputs.
See also Notes 12 and 13 to the consolidated financial statements.
Equity Investments
The Company follows FASB ASC Topic 321, Investments – Equity Securities, or ASC 321, which requires all applicable investments in equity securities with a readily determinable fair value to be valued as such, and those without a readily determinable fair value, are measured at cost, less any impairment plus or minus any observable price changes. Equity investments of
$
9.3
million
and
$
9.2
million
as of September 30, 2025 and December 31, 2024, which were comprised mainly of nonmarketable stock and stock warrants, are recorded at cost less any impairment plus or minus observable price changes. Substantially all of these equity investments are held by Medallion Capital, our SBIC subsidiary, in connection with its mezzanine lending business. As of September 30, 2025, cumulative impairment of
$
6.3
million
had been recorded with respect to these investments. The Company recognized $
0.3
million and $
15.8
million of net gains on equity investments during the
three and nine months ended September 30, 2025
and $
0.5
million of net losses and $
3.2
million of net gains on equity investments during the
three and nine months ended September 30, 2024.
During 2021, the Company purchased $
2.0
million of
equity securities
with a readily determinable fair value. As a result, all unrealized gains and losses are included in gain (loss) on equity investments. As of
September 30, 2025 and December 31, 2024, the fair value of these securities were
$
1.8
million
and
$
1.7
million
and are included in other assets on the consolidated balance sheets. For the three and nine months ended September 30, 2025 and 2024
, the Company realized less than $
0.1
million of gains related to equity securities.
Investment Securities
The Company follows FASB ASC Topic 320, Investments – Debt Securities, or ASC 320, which requires that all applicable investments in debt securities be classified as trading securities, available-for-sale securities, or held-to-maturity securities. Investment securities are purchased from time-to-time in the open market at prices that are greater or lesser than the par value of the investment. The resulting premium or discount is deferred and recognized using the interest method. ASC 320 further requires that held-to-maturity securities be reported at amortized cost and available-for-sale securities be reported at fair value, with unrealized gains and losses excluded from earnings at the date of the consolidated financial statements, and reported in accumulated other comprehensive loss as a separate component of stockholders’ equity, net of the effect of income taxes, until they are sold. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results and any amounts previously included in stockholders’ equity, which were recorded net of the income tax effect, will be reversed. In accordance with ASC 326, the Company does not maintain an allowance for credit losses for accrued interest receivable.
For available-for-sale debt securities in an unrealized loss position, the Company first determines if it intends to sell the security, or if it is more likely than not that it will be required to sell it before recovering its amortized cost basis. If either condition is met, the security’s amortized cost basis is written down to its fair value through earnings. If neither condition is met, the Company assesses whether the decline in fair value is the result of credit losses or other factors. This assessment includes reviewing changes in the rating of the security by a rating agency, increases in defaults on the underlying collateral, and the extent to which the securities are issued by the federal government or its agencies, including the amount of the guarantee issued by those agencies, among other factors. If a credit loss exists, the Company compares the present value of expected cash flows from the security to its amortized cost basis. If the present value is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded through earnings, but limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment not recorded through an allowance for credit losses is recognized in other comprehensive income, net of taxes.
Changes in the allowance for credit losses are recorded as a provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management confirms the uncollectibility of an available-for-sale debt security or when either of the criteria regarding intent or requirement to sell is met. There were
no
investment securities allowance for credit losses as of
September 30, 2025 and December 31, 2024
.
Page
11
of 66
Loans
The Company’s loans, classified as held for investment, are currently reported at amortized cost, which is the principal amount outstanding, inclusive of loan origination costs, which primarily includes deferred costs paid to loan originators, and which are amortized to interest income over the life of the loan. Loans which the Company has classified as held for sale are reported at lower of amortized cost or fair value.
Loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield of the related loans. As of September 30, 2025 and December 31, 2024, net loan origination costs were
$
51.5
million
and
$
46.6
million
. Net amortization was $
2.7
million and $
7.6
million for the
three and nine months ended September 30, 2025
and was $
2.3
million and $
6.6
million for the
three and nine months ended September 30, 2024.
Interest income is recorded on the accrual basis. The consumer loan portfolio is typified by a larger number of smaller dollar loans that have similar characteristics. A loan is nonperforming when based on current information and events, it is unlikely the Company will be able to collect all amounts due according to the contractual terms of the original loan agreement. Management considers loans that are in bankruptcy status, but have not been charged-off, to be nonperforming. Loans are considered past due when a borrower fails to make a full payment by the payment due date or maturity date. Consumer loans are placed on nonaccrual when they become 90 days past due, and are charged off in their entirety when deemed uncollectible, if they enter bankruptcy, or when they become 120 days past due, whichever occurs first, at which time appropriate recovery efforts against both the borrower and the underlying collateral are initiated. For the Recreation loan portfolio, the process to repossess the collateral is generally started at 60 days past due. If the collateral is not located and the account reaches 120 days delinquent, the account is charged off. If the collateral is repossessed, a loss is recorded by writing the collateral down to its fair value less selling costs, and the collateral is sent to auction. When the collateral is sold, the net auction proceeds are applied to the account, and any remaining balance is written off. Proceeds collected on charged off accounts are recorded as recoveries. Commercial loans and taxi medallion loans are placed on nonaccrual status, and all uncollected accrued interest is reversed, when there is doubt as to the collectability of interest or principal, or if loans are 90 days or more past due, unless management has determined that they are both well-secured and in the process of collection. Interest income on nonaccrual loans is generally recognized when cash is received, unless a determination has been made to apply all cash receipts to principal.
The Company may modify the contractual cash flow of loans in situations where borrowers are experiencing financial difficulties. The Company strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before they reach nonaccrual status. These modified terms may include interest rate reductions, principal forgiveness, term extensions, payment forbearance and other actions intended to minimize the economic loss to the Company and to avoid foreclosure or repossession of the collateral. For modifications where the Company forgives principal, the entire amount of such principal forgiveness is immediately charged off.
Loan collateral in process of foreclosure primarily includes taxi medallion loans that have reached 120 days past due and have been charged down to the net realizable value of the underlying collateral, in add
ition to consumer repossessed collateral in the process of being sold. For New York City taxi medallion loans in the process of foreclosure, the Company continued to utilize a net value of $
79,500
when assessing net realizable value for these taxi medallion loans, despite fluctuating current transfer prices which may exceed that level from time to time
. The "loan collateral in the process of foreclosure" designation reflects that the collection activities on these loans have transitioned from working with the borrower to the liquidation of the collateral securing the loans.
Loans Held for Sale
Loans held for sale consist of recreation loans and strategic partnership loans intended to be sold in the secondary market. Loans held for sale are recorded at the lower of amortized cost or fair value. Changes in fair value are recognized in non-interest income. For loans transferred into the held for sale classification from the held for investment classification, any allowance for credit losses previously recorded is reversed at the transfer date, and the loans are transferred at their amortized cost basis (which is reduced by any previous charge-offs, but excludes any allowance for credit losses). As of September 30, 2025 and December 31, 2024
, the Company did
no
t recognize any fair value adjustments related to loans held for sale.
Changes in fair value are recognized in non-interest income.
Page
12
of 66
Allowance for Credit Losses
The Company follows Accounting Standards Update 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", or ASC 326, which requires recognition of lifetime expected losses using "reasonable and supportable" expectations about the future, referred to as the current expected credit loss, or CECL, methodology. For consumer loans, the Company uses historical delinquent loan performance, qualitative adjustments, and actual loss rates modified by quantitative adjustments based on macroeconomic factors over a twelve-month reasonable and supportable forecast period followed by a six month reversion period. For commercial loans, the Company assesses the historical impact that macroeconomic indicators have had on the loan portfolio, to determine an approximate allowance for credit losses. Unlike consumer loans, where loans may have similar performing characteristics, each commercial loan is unique. The Company evaluates each commercial loan for specific impairment with additional allowance for credit losses recognized as necessary. For taxi medallion loans, the Company individually evaluates each loan and establishes a reserve based on fair value of collateral less cost to sell.
The allowance is evaluated on a quarterly basis by management based on the collectability of the loans in light of historical experience, the nature and size of the loan portfolio, adverse situations that may affect the borrowers' ability to repay, estimated value of any underlying collateral, prevailing economic conditions, and excess concentration risks. This evaluation is inherently subjective, as it requires estimates, including those based on changes in economic conditions, that are susceptible to significant revision as more information becomes available. Credit losses are deducted from the allowance, and subsequent recoveries are added back to the allowance. The Company has elected to exclude accrued interest from its measurement of the allowance for credit losses.
Goodwill and Intangible Assets
Goodwill is evaluated for impairment on an annual basis at December 31 of each year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Other intangible assets with finite useful lives are amortized either on an accelerated or straight-line basis over their estimated useful lives. Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
As of September 30, 2025 and December 31, 2024, the Company had goodwill of
$
150.8
million
, all of which related to the recreation and home improvement lending segments. As of September 30, 2025 and December 31, 2024, the Company had intangible assets of
$
18.1
million
and
$
19.1
million
. The Company recognized
$
0.4
million and $
1.1
million
of amortization expense on the intangible assets for the three and nine months ended September 30, 2025 and 2024.
Management engaged an independent third-party expert to perform a quantitative assessment of goodwill for impairment at December 31, 2024. The third-party expert’s assessment determined that it was more likely than not that the fair value of both the recreation lending and home improvement lending segments individually were not less than the carrying value of each of these segments. Based upon inputs and analysis deemed appropriate by the third-party expert, the third-party expert concluded that a fair value premium existed in excess of carrying value with respect to the recreation and home improvement lending segments. During the three and nine months ended September 30, 2025 the Company did not identify any triggering events that would require re-evaluation of goodwill impairment in either segment.
The table below presents the intangible assets as of
September 30, 2025 and December 31, 2024:
(Dollars in thousands)
September 30, 2025
December 31, 2024
Brand-related intellectual property
$
13,750
$
14,575
Home improvement contractor relationships
4,313
4,571
Total intangible assets
$
18,063
$
19,146
Fixed Assets
Fixed assets are carried at cost less accumulated depreciation and amortization, and are depreciated on a straight-line basis over their estimated useful lives of
3
to
10 years
. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated economic useful life of the improvement. Depreciation and amortization expense was $
0.6
million and $
1.9
million for the
three and nine months ended September 30, 2025 and
$
0.1
million and $
0.3
million for the
three and nine months ended September 30, 2024
.
Page
13
of 66
Deferred Costs
Deferred financing costs represent costs associated with obtaining the Company’s borrowings, and are amortized on a straight-line basis over the lives of the related financing agreements and life of the respective pool. Amortization expense, included as interest expense in the consolidated statements of operations, was $1.1 million and $3.3 million for the three and nine months ended September 30, 2025 and was $1.2 million and $3.0 million for the three and nine months ended September 30, 2024. In addition, the Company capitalizes certain costs for transactions in the process of completion (other than business combinations), including those for potential investments, and the sourcing of other financing alternatives. Upon completion or termination of the transaction, any accumulated amounts are amortized against income over an appropriate period, or written off. The amount on the Company’s consolidated balance sheets related to deposits and borrowing facilities were
$
9.0
million
and
$
8.2
million
as of September 30, 2025 and December 31, 2024,
and there were
no
capitalized transaction costs as of
September 30, 2025 and December 31, 2024
.
Income Taxes
Income taxes are accounted for using the asset and liability approach in accordance with FASB ASC Topic 740, Income Taxes, or ASC 740. Deferred tax assets and liabilities reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at the enacted tax rates expected to apply in the year when taxes are actually paid or recovered. Deferred tax assets are also recorded for net operating losses, capital losses and any tax credit carryforwards. A valuation allowance is provided against a deferred tax asset when it is more likely than not that some or all of the deferred tax assets will not be realized. All available evidence, both positive and negative, is considered to determine whether a valuation allowance for deferred tax assets is needed. Items considered in determining the Company’s valuation allowance include expectations of future earnings of the appropriate tax character, recent historical financial results, tax planning strategies, the length of statutory carryforward periods and the expected timing of the reversal of temporary differences. The Company recognizes tax benefits of uncertain tax positions only when the position is more likely than not to be sustained assuming examination by tax authorities. The Company records income tax related interest and penalties, if applicable, within current income tax expense.
Earnings Per Share (EPS)
Basic earnings per share are computed by dividing net income resulting from operations available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if option contracts to issue common stock were exercised, or if restricted stock vests, and has been computed after considering the weighted average dilutive effect of the Company’s stock options and restricted stock. The Company uses the treasury stock method to calculate diluted EPS, which is a method of recognizing the use of proceeds that could be obtained upon exercise of options and warrants, including unvested compensation expense related to the shares, in computing diluted EPS. It assumes that any proceeds would be used to purchase common stock at the average market price during the period.
The table below presents the calculation of basic and diluted EPS.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)
2025
2024
2025
2024
Net income attributable to common stockholders
$
7,763
$
8,611
$
30,846
$
25,736
Weighted average common shares outstanding applicable to basic EPS
22,854,836
22,490,792
22,737,572
22,576,446
Effect of restricted stock grants
435,236
440,704
457,726
485,179
Effect of dilutive stock options
300,108
166,268
259,217
194,800
Effect of performance stock unit grants
846,953
350,165
677,325
298,640
Adjusted weighted average common shares outstanding applicable to diluted EPS
24,437,133
23,447,929
24,131,840
23,555,065
Basic earnings per share
$
0.34
$
0.38
$
1.36
$
1.14
Diluted earnings per share
0.32
0.37
1.28
1.09
Potentially dilutive common shares excluded from the above calculations aggregated to
no
shares as of
September 30, 2025
and
9,000
shares as of
September 30, 2024
.
Stock Compensation
The Company follows FASB ASC Topic 718, or ASC 718, Compensation – Stock Compensation, for its equity incentive, stock option, and restricted stock plans, and accordingly, the Company recognizes the expense of these grants as required. Stock-based employee compensation costs pertaining to stock options are reflected in net income resulting from operations for any new grants using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underl
ying option. Stock-based employee compensation costs pertaining to restricted stock and performance stock units are reflected in net income resulting from operations for any new grants using the grant date fair value of the shares and units granted, expensed over the vesting period of the underlying stock.
Page
14
of 66
Regulatory Capital
The Bank subsidiary is subject to various regulatory capital requirements administered by the FDIC and the Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the bank regulators about components, risk weightings, and other factors.
FDIC-insured banks, including the Bank, are subject to certain federal laws, which impose various legal limitations on the extent to which banks may finance or otherwise supply funds to certain of their affiliates. In particular, the Bank is subject to certain restrictions on any extensions of credit to, or other covered transactions with, such as certain purchases of assets, the Company or its affiliates.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as defined in the regulations (presented in the table belo
w). Additionally, as conditions of granting the Bank’s application for federal deposit insurance, the FDIC ordered that the Tier 1 leverage capital to total assets ratio, as defined, be not less than
15
%, a level which could affect the Bank's ability to pay dividends to the Company, and that an adequate allowance for credit losses be maintained. As of
September 30, 2025 and December 31, 2024, the Bank’s Tier 1 leverage ratio was considered well-capitalized. The Bank had excess Tier 1 leverage capital of
$
63.5
million
over the
15
% minimum required, which was
$
380.9
million
based on our total assets as of September 30, 2025.
On July 1, 2025, the Bank redeemed its Series F Preferred Stock, in its entirety, at an aggregate redemption price of $
46.0
million.
This redemption reduced Tier 1 leverage capital and the correlated excess Tier 1 leverage capital above the
15
% minimum interest required.
The Bank’s actual capital amounts and ratios and the regulatory minimum ratios are presented in the following table.
Regulatory
(Dollars in thousands)
Adequately Capitalized
Well-
Capitalized
September 30, 2025
December 31, 2024
Common equity tier 1 capital
$
344,972
$
322,229
Tier 1 capital
444,401
391,016
Total capital
476,139
422,139
Average assets
2,539,064
2,493,857
Risk-weighted assets
2,471,481
2,429,349
Leverage ratio
(1)
4.0
%
5.0
%
17.5
%
15.7
%
Common equity tier 1 capital ratio
(2)
7.0
6.5
14.0
13.3
Tier 1 capital ratio
(3)
8.5
8.0
18.0
16.1
Total capital ratio
(3)
10.5
10.0
19.3
17.4
(1)
Calculated by dividing Tier 1 capital by average assets.
(2)
Calculated by subtracting preferred stock or non-controlling interest from Tier 1 capital and dividing by risk-weighted assets.
(3)
Calculated by dividing Tier 1 or total capital by risk-weighted assets.
In the above table, the minimum risk-based ratios as of September 30, 2025 and December 31, 2024
reflect the capital conservation buffer of
2.5
%. The minimum regulatory requirements, inclusive of the capital conservation buffer, were the binding requirements for the risk-based requirements, and the “well-capitalized” requirements were the binding requirements for Tier 1 leverage capital as of both
September 30, 2025 and December 31, 2024
.
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes, or Topic 740: Improvements to Income Tax Disclosures. The main objective of this update is to provide transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for the annual periods beginning after December 15, 2024. The Company does not expect this update to have a material impact on the financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income - Expense
Disaggregation
of Income Statement Expenses. This update requires additional disaggregation of specific types of expenses within the notes to consolidated financial statements on an annual and interim basis. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt ASU 2024-03 beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is assessing the impact of the update on the accompanying financial statements.
Reclassifications
Certain reclassifications have been made to prior year balances to conform with the current year presentation. These reclassifications have no effect on the previously reported results of operations.
Page
15
of 66
(3) INVESTMENT SECURITIES
The following tables present details of fixed
maturity securities available for sale as of September 30, 2025 and December 31, 2024:
September 30, 2025
(Dollars in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Mortgage-backed securities, principally obligations of U.S. federal agencies
$
46,336
$
137
$
(
3,468
)
$
43,005
State and municipalities
19,117
65
(
1,240
)
17,942
Agency bonds
141
—
(
7
)
134
Total
$
65,594
$
202
$
(
4,715
)
$
61,081
December 31, 2024
(Dollars in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Mortgage-backed securities, principally obligations of U.S. federal agencies
$
41,475
$
28
$
(
4,802
)
$
36,701
State and municipalities
17,373
81
(
1,516
)
15,938
Agency bonds
2,179
2
(
15
)
2,166
Total
$
61,027
$
111
$
(
6,333
)
$
54,805
The amortized cost and estimated fair market value of investment securities at
September 30, 2025 by contractual maturity are presented below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
September 30, 2025
(Dollars in thousands)
Amortized
Cost
Fair
Value
Due in one year or less
$
2,441
$
2,409
Due after one year through five years
8,800
8,518
Due after five years through ten years
9,483
9,144
Due after ten years
44,870
41,010
Total
$
65,594
$
61,081
The following tables present information pertaining to securities with gross unrealized losses at
September 30, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position.
Less than Twelve Months
Twelve Months and Over
September 30, 2025
(Dollars in thousands)
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Mortgage-backed securities, principally obligations of U.S. federal agencies
$
(
24
)
$
3,424
$
(
3,444
)
$
26,954
State and municipalities
(
19
)
959
(
1,221
)
13,889
Agency bonds
—
—
(
7
)
134
Total
$
(
43
)
$
4,383
$
(
4,672
)
$
40,977
Less than Twelve Months
Twelve Months and Over
December 31, 2024
(Dollars in thousands)
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Mortgage-backed securities, principally obligations of U.S. federal agencies
$
(
106
)
$
5,423
$
(
4,696
)
$
29,619
State and municipalities
(
269
)
4,884
(
1,247
)
9,939
Agency bonds
—
—
(
15
)
166
Total
$
(
375
)
$
10,307
$
(
5,958
)
$
39,724
As of September 30, 2025 and December 31, 2024, the Company had
52
and
58
securities with unrealized losses that have not been recognized in income.
The investments are mortgage-backed securities and similar instruments with lower risk characteristics. The Company regularly reviews investment securities for impairment resulting from credit loss using both qualitative and quantitative criteria, as necessary based on the composition of the portfolio at period end. Based on the Company's assessment, no material impairments for credit losses were recognized during the period. The Company does not intend to sell its investment securities that are in an unrealized loss position and believes that it is unlikely that it will be required to sell these securities before recovery of the amortized cost. As of September 30, 2025 and December 31, 2024
, the Company did not hold investments in any single issuer with an aggregate book value that exceeded
10
% of the Company's equity, other than U.S. Government agency residential mortgage-backed securities issued by the Federal National Mortgage Association.
Page
16
of 66
(4) LOANS AND ALLOWANCE FOR CREDIT LOSSES
The following table presents the major classification of loans, inclusive of capitalized loan origination costs, as of
September 30, 2025 and December 31, 2024.
September 30, 2025
December 31, 2024
(Dollars in thousands)
Amount
As a
Percent of
Total Loans
Amount
As a
Percent of
Total Loans
Loans held for investment:
Recreation
$
1,545,528
60
%
$
1,422,403
57
%
Home improvement
804,003
31
827,211
33
Commercial
135,123
5
111,273
4
Taxi medallion
1,509
*
1,909
*
Total loans
2,486,163
97
2,362,796
95
Loans held for sale, at lower of amortized cost or fair value:
Recreation
57,641
2
120,840
5
Strategic partnership
15,277
*
7,386
*
Total loans held for sale, at lower of amortized cost or fair value
72,918
2
128,226
5
Total loans and loans held for sale
$
2,559,081
100
%
$
2,491,022
100
%
(*) Less than 1%.
The following tables present the activity of the gross loans and loans held for sale for the
three and nine months ended September 30, 2025.
Three Months Ended September 30, 2025
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – June 30, 2025
(1)
$
1,546,252
$
803,535
$
121,415
$
1,564
$
12,285
$
2,485,051
Loan originations
141,667
59,711
17,500
125
208,352
427,355
Principal receipts, sales, and maturities
(
64,097
)
(
55,762
)
(
3,009
)
(
180
)
(
205,360
)
(
328,408
)
Charge-offs
(
16,844
)
(
3,840
)
(
1,103
)
—
—
(
21,787
)
Transfer to loan collateral in process of foreclosure, net
(
7,329
)
—
—
—
—
(
7,329
)
Amortization of origination fees and costs, net
(
3,768
)
1,040
3
—
—
(
2,725
)
Origination fees and costs, net
7,288
(
681
)
—
—
—
6,607
Paid-in-kind interest
—
—
317
—
—
317
Gross loans – September 30, 2025
(1)
$
1,603,169
$
804,003
$
135,123
$
1,509
$
15,277
$
2,559,081
(1)
Includes loans held for sale and loans held for investment.
Nine Months Ended September 30, 2025
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – December 31, 2024
(1)
$
1,543,243
$
827,211
$
111,273
$
1,909
$
7,386
$
2,491,022
Loan originations
371,289
162,760
36,575
197
513,229
1,084,050
Principal receipts, sales, and maturities
(
239,659
)
(
173,753
)
(
12,320
)
(
582
)
(
505,338
)
(
931,652
)
Charge-offs
(
53,391
)
(
13,018
)
(
1,233
)
(
15
)
—
(
67,657
)
Transfer to loan collateral in process of foreclosure, net
(
22,324
)
—
—
—
—
(
22,324
)
Amortization of origination fees and costs, net
(
10,995
)
3,329
26
—
—
(
7,640
)
Origination fees and costs, net
15,006
(
2,526
)
—
—
—
12,480
Paid-in-kind interest
—
—
802
—
—
802
Gross loans – September 30, 2025
(1)
$
1,603,169
$
804,003
$
135,123
$
1,509
$
15,277
$
2,559,081
(1)
Includes loans held for sale and loans held for investment.
Page
17
of 66
The following tables present the activity of the gross loans and loans held for sale for the three and nine months ended September 30, 2024.
Three Months Ended September 30, 2024
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – June 30, 2024
$
1,497,428
$
773,184
$
110,197
$
3,482
$
1,299
$
2,385,590
Loan originations
139,105
96,545
—
—
39,918
275,568
Principal receipts, sales, and maturities
(
61,563
)
(
51,409
)
(
713
)
(
239
)
(
38,024
)
(
151,948
)
Charge-offs
(
16,242
)
(
4,258
)
—
—
—
(
20,500
)
Transfer to loan collateral in process of foreclosure, net
(
6,609
)
—
—
—
—
(
6,609
)
Amortization of origination fees and costs, net
(
3,549
)
1,206
13
—
—
(
2,330
)
Origination fees and costs, net
6,059
(
1,197
)
(
1
)
—
—
4,861
Paid-in-kind interest
—
—
647
—
—
647
Gross loans – September 30, 2024
$
1,554,629
$
814,071
$
110,143
$
3,243
$
3,193
$
2,485,279
Nine Months Ended September 30, 2024
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – December 31, 2023
$
1,336,226
$
760,617
$
114,827
$
3,663
$
553
$
2,215,886
Loan originations
454,433
216,111
7,000
250
79,952
757,746
Principal receipts, sales, and maturities
(
177,152
)
(
148,818
)
(
13,546
)
(
670
)
(
77,312
)
(
417,498
)
Charge-offs
(
48,970
)
(
13,219
)
—
—
—
(
62,189
)
Transfer to loan collateral in process of foreclosure, net
(
17,703
)
—
—
—
—
(
17,703
)
Amortization of origination fees and costs, net
(
9,715
)
3,057
30
—
—
(
6,628
)
Origination fees and costs, net
17,510
(
3,677
)
(
78
)
—
—
13,755
Paid-in-kind interest
—
—
1,910
—
—
1,910
Gross loans – September 30, 2024
$
1,554,629
$
814,071
$
110,143
$
3,243
$
3,193
$
2,485,279
The following tables present the activity in the allowance for credit losses for the
three and nine months ended September 30, 2025 and 2024.
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
(1)
Total
Balance at December 31, 2024
$
71,102
$
20,536
$
5,190
$
540
$
97,368
Charge-offs
(
20,274
)
(
4,227
)
(
130
)
(
15
)
(
24,646
)
Recoveries
3,860
1,095
—
675
5,630
Provision (benefit) for credit losses
16,870
2,845
3,114
(
815
)
22,014
Balance at March 31, 2025
$
71,558
$
20,249
$
8,174
$
385
$
100,366
Charge-offs
(
16,273
)
(
4,951
)
—
—
(
21,224
)
Recoveries
4,419
1,190
10
573
6,192
Provision (benefit) for credit losses
15,336
3,934
2,912
(
620
)
21,562
Balance at June 30, 2025
$
75,040
$
20,422
$
11,096
$
338
$
106,896
Charge-offs
(
16,844
)
(
3,840
)
(
1,103
)
—
(
21,787
)
Recoveries
3,965
1,758
(
10
)
1,675
7,388
Provision (benefit) for credit losses
16,708
2,125
1,414
(
1,691
)
18,556
Balance at September 30, 2025
$
78,869
$
20,465
$
11,397
$
322
$
111,053
(1)
As of
September 30, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were
$
172.6
million
, including
$
107.5
million
related to loans secured by New York taxi medallions, some of which may represent recovery opportunities for the Company.
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Total
Balance at December 31, 2023
$
57,532
$
21,019
$
4,148
$
1,536
$
84,235
Charge-offs
(
18,101
)
(
4,898
)
—
—
(
22,999
)
Recoveries
3,548
911
20
911
5,390
Provision (benefit) for credit losses
17,030
898
216
(
943
)
17,201
Balance at March 31, 2024
$
60,009
$
17,930
$
4,384
$
1,504
$
83,827
Charge-offs
(
14,627
)
(
4,063
)
—
—
(
18,690
)
Recoveries
3,962
1,243
—
869
6,074
Provision (benefit) for credit losses
15,795
3,279
478
(
975
)
18,577
Balance at June 30, 2024
$
65,139
$
18,389
$
4,862
$
1,398
$
89,788
Charge-offs
(
16,242
)
(
4,258
)
—
—
(
20,500
)
Recoveries
3,991
745
—
2,343
7,079
Provision (benefit) for credit losses
17,494
4,855
252
(
2,450
)
20,151
Balance at September 30, 2024
$
70,382
$
19,731
$
5,114
$
1,291
$
96,518
Page
18
of 66
The following tables present the gross charge-offs for the
three and nine months ended September 30, 2025, by the year of origination:
Three Months Ended September 30, 2025
(Dollars in thousands)
2025
2024
2023
2022
2021
Prior
Total
Recreation
$
774
$
3,803
$
4,041
$
4,136
$
1,975
$
2,115
$
16,844
Home improvement
26
957
929
1,109
358
461
3,840
Commercial
—
—
—
—
—
1,103
1,103
Taxi medallion
—
—
—
—
—
—
—
Total
$
800
$
4,760
$
4,970
$
5,245
$
2,333
$
3,679
$
21,787
Nine Months Ended September 30, 2025
(Dollars in thousands)
2025
2024
2023
2022
2021
Prior
Total
Recreation
$
785
$
10,343
$
11,665
$
13,081
$
6,014
$
11,503
$
53,391
Home improvement
26
2,905
4,135
3,303
1,429
1,220
13,018
Commercial
—
—
—
130
—
1,103
1,233
Taxi medallion
—
—
—
—
—
15
15
Total
$
811
$
13,248
$
15,800
$
16,514
$
7,443
$
13,841
$
67,657
The following tables present the gross charge-offs for the three and nine months ended September 30, 2024, by the year of origination:
Three Months Ended September 30, 2024
(Dollars in thousands)
2024
2023
2022
2021
2020
Prior
Total
Recreation
$
921
$
4,717
$
5,167
$
2,354
$
956
$
2,127
$
16,242
Home improvement
148
1,275
1,583
787
209
256
4,258
Commercial
—
—
—
—
—
—
—
Taxi medallion
—
—
—
—
—
—
—
Total
$
1,069
$
5,992
$
6,750
$
3,141
$
1,165
$
2,383
$
20,500
Nine Months Ended September 30, 2024
(Dollars in thousands)
2024
2023
2022
2021
2020
Prior
Total
Recreation
$
1,020
$
12,579
$
17,034
$
7,841
$
3,231
$
7,265
$
48,970
Home improvement
188
4,307
4,857
2,457
615
795
13,219
Commercial
—
—
—
—
—
—
—
Taxi medallion
—
—
—
—
—
—
—
Total
$
1,208
$
16,886
$
21,891
$
10,298
$
3,846
$
8,060
$
62,189
The following tables present the allowance for credit losses by type as of
September 30, 2025 and December 31, 2024.
September 30, 2025
(Dollars in thousands)
Amount
Percentage
of Allowance
(1)
Allowance as
a Percent of
Loan Category
(2)
Recreation
$
78,869
71
%
5.10
%
Home improvement
20,465
18
2.55
Commercial
11,397
10
8.43
Taxi medallion
322
*
21.35
Total
(2)
$
111,053
100
%
(1)
Does
not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.
(2)
As of
September 30, 2025, total allowance for credit losses as a percent of nonaccrual loans was
297.41
%
.
(*) Less than 0.1%.
December 31, 2024
(Dollars in thousands)
Amount
Percentage
of Allowance
(1)
Allowance as
a Percent of
Loan Category
(2)
Recreation
$
71,102
73
%
5.00
%
Home improvement
20,536
21
2.48
Commercial
5,190
5
4.66
Taxi medallion
540
1
28.29
Total
(2)
$
97,368
100
%
(1)
Does
not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.
(2)
As of
December 31, 2024, total allowance for credit losses as a percent of nonaccrual loans was
291.93
%
Page
19
of 66
The following tables present the performance status of loans and loans held for sale as of
September 30, 2025 and December 31, 2024.
September 30, 2025
(Dollars in thousands)
Performing
Nonperforming
Total
Percentage of
Nonperforming
to Total
Recreation
$
1,593,347
$
9,822
$
1,603,169
0.61
%
Home improvement
802,764
1,239
804,003
0.15
Commercial
110,353
24,770
135,123
18.33
Taxi medallion
—
1,509
1,509
100.00
Strategic partnership
15,277
—
15,277
—
Total
$
2,521,741
$
37,340
$
2,559,081
1.46
%
December 31, 2024
(Dollars in thousands)
Performing
Nonperforming
Total
Percentage of
Nonperforming
to Total
Recreation
$
1,532,448
$
10,795
$
1,543,243
0.70
%
Home improvement
825,825
1,386
827,211
0.17
Commercial
92,010
19,263
111,273
17.31
Taxi medallion
—
1,909
1,909
100.00
Strategic partnership
7,386
—
7,386
—
Total
$
2,457,669
$
33,353
$
2,491,022
1.34
%
For those loans aged under 90 days past due, there is a possibility that their delinquency status will continue to deteriorate and they will subsequently be placed on nonaccrual status and be reserved for, and as a result, deemed nonperforming.
The following tables present the aging of loans and loans held for sale as of
September 30, 2025 and December 31, 2024.
September 30, 2025
Days Past Due
Recorded
Investment
90 Days and
(Dollars in thousands)
30-59
60-89
90 +
Total
Current
Total
(1)
Accruing
Recreation
$
48,295
$
16,940
$
8,899
$
74,134
$
1,474,323
$
1,548,457
$
—
Home improvement
4,453
1,699
1,251
7,403
799,663
807,066
—
Commercial
—
—
18,924
18,924
116,364
135,288
—
Taxi medallion
—
—
—
—
1,509
1,509
—
Strategic partnership
—
—
—
—
15,277
15,277
—
Total
$
52,748
$
18,639
$
29,074
$
100,461
$
2,407,136
$
2,507,597
$
—
(1)
Excludes
$
51.5
million
of capitalized loan origination costs and fees.
December 31, 2024
Days Past Due
Recorded
Investment
90 Days and
(Dollars in thousands)
30-59
60-89
90 +
Total
Current
Total
(1)
Accruing
Recreation
$
54,169
$
20,376
$
10,018
$
84,563
$
1,407,977
$
1,492,540
$
—
Home improvement
5,407
2,432
1,386
9,225
821,852
831,077
—
Commercial
—
—
16,337
16,337
95,127
111,464
—
Taxi medallion
49
69
—
118
1,791
1,909
—
Strategic partnership
—
—
—
—
7,386
7,386
—
Total
$
59,625
$
22,877
$
27,741
$
110,243
$
2,334,133
$
2,444,376
$
—
(1)
Excludes
$
46.6
million
of capitalized loan origination costs.
Page
20
of 66
(5) FUNDS BORROWED
The following table presents outstanding balances of funds borrowed.
Payments Due for the Twelve Months Ending September 30,
(Dollars in thousands)
2026
2027
2028
2029
2030
Thereafter
September 30,
2025
(1)
December 31, 2024
(1)
Interest
Rate
(2)
Deposits
(3)
$
604,598
$
601,480
$
417,372
$
190,567
$
241,994
$
—
$
2,056,011
$
2,091,663
3.82
%
Strategic partner collateral deposits
5,250
—
—
—
—
—
5,250
3,000
4.08
Privately placed notes
31,250
—
92,750
—
—
22,500
146,500
146,500
8.12
SBA debentures and borrowings
14,000
2,000
1,250
1,250
3,000
63,500
85,000
70,250
3.98
Trust preferred securities
—
—
—
—
—
33,000
33,000
33,000
6.52
Federal reserve and other borrowings
35,000
—
—
—
—
—
35,000
35,000
4.55
Total
$
690,098
$
603,480
$
511,372
$
191,817
$
244,994
$
119,000
$
2,360,761
$
2,379,413
4.14
%
(1)
Excludes deferred financing costs of
$
9.0
million
and
$
8.2
million
as of September 30, 2025 and December 31, 2024
.
(2)
Weighted average contractual rate as of
September 30, 2025
.
(3)
Balance includes
$
4.6
million
and
$
6.0
million
in retail savings deposit balances as of September 30, 2025 and December 31, 2024
.
(A) DEPOSITS
Most deposits are raised through the use of investment brokerage firms that package time deposits in denominations of less than $
250,000
qualifying for FDIC insurance into larger pools that are sold to the Bank. The rates paid on the deposits are highly competitive with market rates paid by other financial institutions. Additionally, a brokerage fee is paid, depending on the maturity of the deposits, the annual expense of which averages less than
0.15
%. Interest on the deposits is accrued daily and paid monthly, quarterly, semiannually, or at maturity. Additionally, the Bank raises deposits through listing services and, as of
September 30, 2025 and December 31, 2024, the Bank had
$
11.7
million
and
$
10.4
million
in listing service deposit balances from other financial institutions. As of September 30, 2025 and December 31, 2024, the Bank had
$
4.6
million
and
$
6.0
million
in retail savings deposit balances.
The following table presents the maturity of the deposit pools and retail savings deposits, which includes strategic partner reserve deposits, as of
September 30, 2025.
(Dollars in thousands)
September 30, 2025
Three months or less
$
106,919
Over three months through six months
133,665
Over six months through one year
364,014
Over one year
1,451,413
Deposits
2,056,011
Strategic partner collateral deposits
5,250
Total deposits
$
2,061,261
(B) FEDERAL RESERVE DISCOUNT WINDOW AND OTHER BORROWINGS
As of September 30, 2025, the Bank had
$
189.6
million
in home improvement loans pledged as collateral to the Federal Reserve. The current advance rate on the pledged loans is approximately
45
%
of book value, for a total of approximately
$
85.7
million
in secured borrowing capacity, none of which was utilized as of September 30, 2025.
The Bank has borrowing arrangements with several correspondent banks. These agreements are accommodations that can be terminated at any time, for any reason and allow the Bank to borrow up to $
75.0
million. As of
September 30, 2025
, $
35.0
million was outstanding with respect to these arrangements.
Page
21
of 66
(C) PRIVATELY PLACED NOTES
The Company has entered into various private placements with certain institutional investors over time.
The following table presents the private placement notes outstanding as of
September 30, 2025 and December 31, 2024.
(Dollars in thousands)
Date of Notes
Maturity
Interest Rate
Interest Payable
September 30, 2025
December 31, 2024
December 2020
December 2027
7.500
%
Semi-annually
$
53,750
$
53,750
February 2021
February 2026
7.250
%
Semi-annually
31,250
31,250
September 2023
September 2028
9.250
%
Semi-annually
39,000
39,000
June 2024
June 2039
8.875
%
Semi-annually
17,500
17,500
August 2024
August 2039
8.625
%
Semi-annually
5,000
5,000
$
146,500
$
146,500
(D) SBA DEBENTURES AND BORROWINGS
Over the years, the SBA has approved commitments for Medallion Capital, typically for a
four and a half
year term and a
1
% fee.
On February 28, 2024, Medallion Capital
accepted a commitment from the SBA for $
18.5
million in debenture financing, all of which had been utilized as of
September 30, 2025.
The following table presents the
SBA debentures and borrowings as of September 30, 2025 and December 31, 2024.
(Dollars in thousands)
Date of Notes
Maturity
Interest Rate
Interest Payable
September 30, 2025
December 31, 2024
March 2015
March 2025
2.87
%
Semi-annually
$
—
$
10,000
September 2015
September 2025
3.57
%
Semi-annually
—
4,000
March 2016
March 2026
3.25
%
Semi-annually
1,500
1,500
March 2016
March 2026
3.18
%
Semi-annually
10,000
10,000
May 2016
September 2026
2.72
%
Semi-annually
2,500
2,500
March 2017
March 2027
3.52
%
Semi-annually
2,000
2,000
September 2018
September 2028
4.22
%
Semi-annually
1,250
1,250
March 2019
March 2029
3.79
%
Semi-annually
1,250
1,250
September 2020
September 2030
1.71
%
Semi-annually
3,000
3,000
June 2021
September 2031
1.58
%
Semi-annually
8,500
8,500
October 2021
March 2032
3.21
%
Semi-annually
7,000
7,000
October 2022
March 2033
5.44
%
Semi-annually
4,750
4,750
April 2023
September 2033
5.96
%
Semi-annually
4,750
4,750
September 2023
March 2034
5.08
%
Semi-annually
4,750
4,750
November 2023
March 2034
5.08
%
Semi-annually
5,000
5,000
March 2025
September 2035
4.18
%
Semi-annually
10,250
—
August 2025
September 2035
4.66
%
Semi-annually
18,500
—
$
85,000
$
70,250
(E) TRUST PREFERRED SECURITIES
In June 2007, the Company issued and sold $
36.1
million aggregate principal amount of
unsecured junior subordinated notes
to Fin Trust which, in turn, sold $
35.0
million of trust preferred securities to Merrill Lynch International and issued
1,083
shares of common stock to the Company. I
nterest is calculated using the Secured Overnight Financing Rate, or
SOFR
, adjusted by a relevant spread adjustment of approximately
26 basis points
, plus
2.13
%.
The notes mature in
September 2037
and are prepayable at par. Interest is payable quarterly in arrears. The terms of the
trust
preferred securities and the notes are substantially identical. In December 2007, $
2.0
million of the
trust preferred securities were repurchased from a third-party investor. As of September 30, 2025,
$
33.0
million
was outstanding on the trust preferred securities.
(F) COVENANT COMPLIANCE
Certain of the Company's debt agreements contain financial covenants that require the Company to maintain certain financial ratios and minimum tangible net worth. As of September 30, 2025
, the Company was in compliance with all such covenants.
Page
22
of 66
(6) LEASES
The Company has leased premises that expire at various dates through February 28, 2031 subject to various operating leases.
The following table presents the operating lease costs and additional information for the
three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Operating lease costs
$
588
$
607
$
1,764
$
1,817
Cash paid for amounts included in the measurement of lease liabilities
—
Operating cash flows from operating leases
680
664
2,036
2,019
Right-of-use asset obtained in exchange for lease liability
(
63
)
(
58
)
(
189
)
(
176
)
The following table presents the breakout of the operating leases as of
September 30, 2025 and December 31, 2024.
(Dollars in thousands)
September 30, 2025
December 31, 2024
Operating lease right-of-use assets
$
5,456
$
6,922
Other current liabilities
2,324
2,294
Operating lease liabilities
3,459
5,128
Total operating lease liabilities
5,783
7,422
Weighted average remaining lease term
3.6
years
4.1
years
Weighted average discount rate
5.55
%
5.56
%
At
September 30, 2025, maturities of the lease liabilities were as follows:
(Dollars in thousands)
Remainder of 2025
$
639
2026
2,567
2027
1,342
2028
575
2029
589
Thereafter
548
Total lease payments
6,260
Less imputed interest
477
Total operating lease liabilities
$
5,783
(7) INCOME TAXES
The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.
The following table presents the significant components of the Company's deferred tax assets and liabilities as of
September 30, 2025 and December 31, 2024.
(Dollars in thousands)
September 30, 2025
December 31, 2024
Deferred tax assets:
Provision for credit losses
$
16,919
$
14,530
Accrued expenses, compensation, and other assets
6,489
5,612
Net operating loss carryforwards
(1)
3,168
3,168
Other investments and investment securities
2,775
2,885
Valuation allowance
(
5,871
)
(
4,418
)
Total deferred tax assets
23,480
21,777
Deferred tax liabilities:
Goodwill and other intangibles
42,499
42,772
Total deferred tax liabilities
42,499
42,772
Deferred tax liability, net
$
19,019
$
20,995
(1)
As of
September 30, 2025
, the Company had an estimated $
11.1
million of net operating loss carryforwards, $
1.7
million of which
expires at various dates between December 31, 2026 and December 31, 2035
, which had a net carrying value of $
0.3
million as of
September 30, 2025
.
Page
23
of 66
The following table presents the components of the Company's tax provision for the
three and nine months ended September 30, 2025 and 2024:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Current
Federal
$
4,467
$
4,899
$
14,885
$
11,421
State
1,646
1,533
5,737
3,652
Deferred
Federal
(
398
)
(
1,798
)
(
1,846
)
(
598
)
State
147
(
579
)
(
396
)
(
279
)
Net provision for income taxes
$
5,862
$
4,055
$
18,380
$
14,196
The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision reported for the
three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Statutory Federal income tax provision at
21
%
$
4,090
$
2,977
$
12,429
$
9,338
State and local income taxes, net of federal income tax benefit
888
583
2,700
1,827
Non-deductible expenses
513
427
1,523
2,582
Valuation allowance against deferred tax assets
1,319
—
1,453
—
Stock based compensation
(
1,377
)
—
(
1,203
)
—
Change in effective state income tax rates and accrual
170
—
866
—
Other
259
68
612
449
Total income tax provision
$
5,862
$
4,055
$
18,380
$
14,196
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. The Company has determined that a valuation allowance is necessary for net operating losses which the Company does not believe will be utilized as well as for deferred compensation in excess of statutory limits. Based upon these considerations, the Company determined the necessary valuation allowance as of September 30, 2025.
The Company has filed tax returns in many states. Federal, New York State, New York City, and Utah State tax filings of the Company for the tax years 2021 through the present are the more significant filings that are open for examination.
(8) STOCK OPTIONS AND RESTRICTED STOCK
The Company’s Board of Directors approved the 2018 Equity Incentive Plan, or the 2018 Plan, which was approved by the Company’s stockholders on June 15, 2018. The terms of the 2018 Plan provide for grants of a variety of different type of stock awards to the Company’s employees and non-employee directors, including options, restricted stock, restricted stock units, performance stock units, and stock appreciation rights, etc. On April 22, 2020, the Company’s Board of Directors approved an amendment to the 2018 Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 19, 2020. On April 26, 2022, the Company’s Board of Directors approved an additional amendment to the 2018 Plan to further increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 14, 2022. On April 25, 2025, the Company’s Board of Directors approved an additional amendment to the 2018 Plan to further increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 12, 2025.
A total of
7,710,968
shares of the Company’s common stock are issuable under the 2018 Plan, and
2,262,718
shares remained issuable as of
September 30, 2025. Awards under the 2018 Plan are subject to certain limitations as set forth in the 2018 Plan, which will terminate when all shares of common stock authorized for delivery have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2018 Plan, whichever occurs first.
Page
24
of 66
The Company’s Board of Directors approved the 2015 Non-Employee Director Stock Option Plan, or the 2015 Director Plan, on March 12, 2015, which was approved by the Company’s shareholders on June 5, 2015, and on which exemptive relief to implement the 2015 Director Plan was received from the SEC on February 29, 2016. A total of
300,000
shares of the Company’s common stock were issuable under the 2015 Director Plan, and
258,334
remained issuable as of June 15, 2018. Effective June 15, 2018, the 2018 Plan was approved, and these remaining shares were rolled into the 2018 Plan. Under the 2015 Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the 2015 Director Plan, the Company granted options to purchase
12,000
shares of the Company’s common stock to a non-employee director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the 2015 Director Plan vested annually, as defined in the 2015 Director Plan. The term of the options could not exceed
ten years
.
The Company’s Board of Directors approved the First Amended and Restated 2006 Director Plan, or the Amended Director Plan, on April 16, 2009, which was approved by the Company’s shareholders on June 5, 2009, and on which exemptive relief to implement the Amended Director Plan was received from the SEC on July 17, 2012. A total of
200,000
shares of the Company’s common stock were issuable under the Amended Director Plan.
No
additional shares are available for issuance under the Amended Director Plan. Under the Amended Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the Amended Director Plan, the Company would grant options to purchase
9,000
shares of the Company’s common stock to an Eligible Director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the Amended Director Plan vested annually, as defined in the Amended Director Plan. The term of the options could not exceed
ten years
.
Additional shares are only available for future issuance under the 2018 Plan. As of September 30, 2025
,
805,971
options on the Company’s common stock were outstanding under the Company’s plans, all of which have previously vested and are exercisable. Additionally, as of
September 30, 2025,
there were
727,415
unvested shares of restricted stock,
823,854
unvested performance stock units,
87,386
unvested restricted stock units, and
327,698
vested, unissued restricted stock units outstanding under the 2018 Plan. As of
September 30, 2025
, the total remaining unrecognized compensation cost related to unvested restricted stock, restricted stock units, and performance stock units was $
6.5
million, which is expected to be recognized over the next
10
quarters. Total stock-based compensation expense was $
1.7
million and $
5.1
million, or $
0.07
and $
0.21
per diluted common share, for the
three and nine months ended September 30, 2025 and
$
1.5
million and $
4.6
million, or $
0.06
and $
0.20
per diluted common share, for the three and nine months ended September 30, 2024.
The fair value of each restricted stock grant, each restricted stock unit, and each performance stock unit is determined on the date of grant by the closing market price of the Company’s common stock on the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. There were
no
options granted during
the nine months ended September 30, 2025 and 2024.
During 2023, the Company’s Compensation Committee of the Board of Directors began granting performance stock units, or PSUs, to certain officers and employees of the Company. Granted PSUs are subject to specified performance criteria for a particular performance period. The number of PSUs that vest can range from
zero
to
200
% of the grant amount. In addition, dividends that accrue during the vesting period are reinvested in dividend equivalent PSUs. PSUs and the related dividend equivalent PSUs are converted into shares of common stock after vesting. Once the PSUs and dividend equivalent PSUs have vested, shares of common stock are delivered.
Page
25
of 66
The PSUs have vesting conditions based upon certain levels of total pre-tax income as well as return on common equity attained over a three-year period. The PSUs cliff vest after three years based upon the performance of the Company. Dividend equivalent PSUs accumulate and convert to additional shares for the benefit of the grantee at the vesting date or are forfeited if the performance conditions are not met.
The following
table presents the PSU activity for the nine months ended September 30, 2025 and the year ended December 31, 2024.
Number of
Shares
Grant Price
Per Share
Weighted
Average
Grant Price
Outstanding at December 31, 2023
296,444
$
6.08
$
6.08
Granted
215,687
8.97
8.97
Cancelled
—
—
—
Vested
—
—
—
Outstanding at December 31, 2024
512,131
6.08
-
8.97
7.30
Granted
311,723
8.47
8.47
Cancelled
—
—
—
Vested
—
—
—
Outstanding at March 31, 2025
823,854
6.08
-
8.97
7.74
Granted
—
—
—
Cancelled
—
—
—
Vested
(1)
—
—
—
Outstanding at June 30, 2025
823,854
6.08
-
8.97
7.30
Granted
—
—
—
Cancelled
—
—
—
Vested
—
—
—
Outstanding at September 30, 2025
823,854
$
6.08
-
8.97
$
7.30
The following table presents the activity for the restricted stock programs for the nine months ended September 30, 2025 and the year ended December 31, 2024
.
Number of
Shares
Grant Price
Per Share
Weighted
Average
Grant Price
Outstanding at December 31, 2023
995,376
$
4.89
-
9.37
$
7.74
Granted
347,158
8.97
-
10.32
9.17
Cancelled
(
32,521
)
4.89
-
10.32
8.07
Vested
(1)
(
400,985
)
4.89
-
8.40
7.69
Outstanding at December 31, 2024
909,028
4.89
-
10.32
8.30
Granted
307,059
8.47
8.47
Cancelled
(
3,373
)
4.89
-
10.32
8.86
Vested
(1)
(
484,823
)
4.89
-
8.97
7.70
Outstanding at March 31, 2025
(2)
727,891
8.08
-
10.32
8.77
Granted
—
—
—
Cancelled
(
476
)
9.37
-
10.32
9.70
Vested
—
—
—
Outstanding at June 30, 2025
(2)
727,415
$
8.08
-
10.32
$
8.77
Granted
—
—
—
Cancelled
—
—
—
Vested
—
—
—
Outstanding at September 30, 2025
(2)
727,415
$
8.08
-
10.32
$
8.77
(1)
The aggregate fair value of the restricted stock vested was $
4.2
million for the
nine months ended September 30, 2025
and $
2.7
million for the year ended
December 31, 2024
.
(2)
The aggregate fair value of the restricted stock was $
7.3
million as of
September 30, 2025
. The remaining vesting period was
2.4
years at
September 30, 2025
.
Page
26
of 66
The following table presents the activity for the stock option programs for the
nine months ended September 30, 2025 and the year ended December 31, 2024
.
Number of
Options
Exercise Price
Per Share
Weighted
Average
Exercise Price
Outstanding at December 31, 2023
959,522
$
2.14
-
9.38
$
6.51
Granted
—
—
—
Cancelled
(
4,748
)
4.89
-
7.25
6.15
Exercised
(
40,865
)
4.89
-
7.25
6.35
Outstanding at December 31, 2024
913,909
2.14
-
9.38
6.52
Granted
—
—
—
Cancelled
(
23,716
)
4.89
-
7.25
6.51
Exercised
(1)
(
265
)
4.89
4.89
Outstanding at March 31, 2025
(2)
889,928
2.14
-
9.38
6.51
Granted
—
—
—
Cancelled
(
10,054
)
4.89
-
9.38
9.05
Exercised
(1)
(
41,061
)
4.89
-
7.25
6.23
Outstanding at June 30, 2025
(2)
838,813
2.14
-
7.25
6.50
Granted
—
—
—
Cancelled
—
—
—
Exercised
(1)
(
32,842
)
4.89
-
7.25
6.38
Outstanding at September 30, 2025
(2)
805,971
$
2.14
-
7.25
$
6.50
Options exercisable at:
December 31, 2024
829,286
$
2.14
-
9.38
$
6.53
September 30, 2025
(2)
805,971
$
2.14
-
7.25
$
6.50
(1)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $
0.3
million and $
0.1
million for the
three and nine months ended September 30, 2025 and the year ended December 31, 2024
.
(2)
The aggregate intrinsic value of outstanding options, which represents the difference between the price of the Company’s common stock at
September 30, 2025
and the related exercise price of the underlying options, was $
2.9
million for outstanding options, all of which had previously vested. The remaining contractual life was
4.4
years for outstanding options at
September 30, 2025
.
The following table presents the activity for the unvested options outstanding under the plans described above for the
nine months ended September 30, 2025 and the year ended December 31, 2024
.
Number of
Options
Exercise Price
Per Share
Weighted
Average
Exercise Price
Outstanding at December 31, 2023
261,875
$
4.89
-
7.25
$
6.49
Granted
—
—
—
Cancelled
(
3,822
)
4.89
-
7.25
6.22
Vested
(1)
(
173,430
)
4.89
-
7.25
6.56
Outstanding at December 31, 2024
84,623
4.89
-
6.79
6.37
Granted
—
—
—
Cancelled
(
119
)
4.89
4.89
Vested
(1)
(
84,504
)
4.89
-
6.79
6.37
Outstanding at March 31, 2025
—
—
—
Granted
—
—
—
Cancelled
—
—
—
Vested
(1)
—
—
—
Outstanding at June 30, 2025
—
—
—
Granted
—
—
—
Cancelled
—
—
—
Vested
(1)
—
—
—
Outstanding at September 30, 2025
—
$
—
$
—
(1)
The intrinsic value of the options vested was $
0.1
million for the
nine months ended September 30, 2025
.
During the nine months ended September 30, 2025
, the Company granted
86,410
restricted stock units, or RSUs, with a vesting date of June 12, 2026 at a grant price of $
9.49
and during the year ended
December 31, 2024
, granted
92,350
RSUs which vested on June 11, 2025 at a grant price of $
8.23
. For the RSUs granted in 2025 and
2024, unitholders had the option of deferring settlement until a future date if the recipient makes a formal election under the guidelines of IRC Section 409A. As of September 30, 2025
, there were
415,084
RSUs outstanding, including
327,698
which had previously vested.
Page
27
of 66
(9) SEGMENT REPORTING
The Company has
five
business segments, which include
four
lending segments and
one
non-operating segment, which are reflective of how Company management makes decisions about its business and operations.
The four lending segments reflect the main types of lending performed at the Company, which are recreation, home improvement, commercial, and taxi medallion lending. The recreation and home improvement lending segments are operated by the Bank and loans are made to borrowers residing nationwide. The recreation lending segment is a consumer finance business that works with third-party dealers and financial service providers to finance RVs, boats, collector cars, and other consumer recreational equipment, of which RVs, boats, and collector cars make up
54
%
,
21
%
, and
12
%
of the segment portfolio,
with no other product lines at or above
10
%,
as of September 30, 2025. The highest concentrations of recreation loans are in Texas and Florida at
16
%
and
13
%
of loans outstanding and with no other states at or above
10
% as of
September 30, 2025. The home improvement lending segment works with contractors and financial service providers to finance residential home improvement with the largest product lines being swimming pools, roofs, and windows at
31
%
,
29
%
, and
11
%
of total home improvement loans outstanding, and with no other product lines at or above
10
% as of
September 30, 2025. The highest concentrations of home improvement loans are in Florida and Texas at
13
%
and
12
%
of loans outstanding, with no other states at or above
10
% as of
September 30, 2025. The commercial lending segment focuses on serving a wide variety of industries, with concentrations in manufacturing, construction, and wholesale trade making up
56
%
,
16
%
, and
10
%
of the loans outstanding as of September 30, 2025, with no other product lines at or above
10
%
as of September 30, 2025. The commercial lending segment invests across the United States with a concentration in California and New York having
25
%
and
10
%
of the segment portfolio, with no other states having a concentration at or above
10
%
as of September 30, 2025. The taxi medallion lending segment arose in connection with the financing of taxi medallions, taxis, and related assets, primarily all of which are located in the New York City metropolitan area as of September 30, 2025.
The Company's corporate and other investments segment is a non-operating segment that includes items not allocated to the Company's operating segments such as investment securities, equity investments, intercompany eliminations, goodwill, and other corporate elements. The Company allocates portions of centrally incurred costs inclusive of overhead and interest expense formulaically based upon overall capital allocated to the lending segments.
As part of segment reporting, capital ratios for all operating segments have been normalized as a percent of consolidated total equity divided by total assets, with the net adjustment applied to corporate and other investments. In addition, the commercial segment primarily represents the mezzanine lending business, with certain legacy commercial loans (immaterial to total) allocated to corporate and other investments.
The Company's chief operating decision maker (CODM) is a group comprised of the
Chief Executive Officer, Chief Financial Officer, President and Chief Operating Officer
, and other senior members of management.
The CODM primarily uses segment information to identify areas to improve efficiency of resources allocation, determine where to reinvest profits, and minimize unnecessary expenses. The CODM assesses segment performance mainly through selected financial ratios such as returns on average assets and net interest margin, which identifies areas requiring action.
Page
28
of 66
The following table presents segment data as of and for the
three months ended September 30, 2025.
Three Months Ended September 30, 2025
Consumer Lending
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Lending
Taxi Medallion
Lending
Corporate and Other Investments
Consolidated
Total interest income
$
53,565
$
20,453
$
4,227
$
91
$
2,435
$
80,771
Total interest expense
13,487
7,344
1,252
16
2,986
25,085
Net interest income (loss)
40,078
13,109
2,975
75
(
551
)
55,686
Provision (benefit) for credit losses
16,708
2,125
1,414
(
1,691
)
—
18,556
Net interest income (loss) after credit loss provision
23,370
10,984
1,561
1,766
(
551
)
37,130
Other income, net
87
2
260
1,781
918
3,048
Operating expenses
(
10,094
)
(
4,591
)
(
1,490
)
(
820
)
(
3,707
)
(
20,702
)
Net income (loss) before taxes
13,363
6,395
331
2,727
(
3,340
)
19,476
Income tax (provision) benefit
(
4,027
)
(
1,943
)
(
50
)
(
838
)
996
(
5,862
)
Net income (loss) after taxes
$
9,336
$
4,452
$
281
$
1,889
$
(
2,344
)
$
13,614
Income attributable to the non-controlling interest
2,336
Redemption of non-controlling interest
3,515
Total net income attributable to Medallion Financial Corp.
$
7,763
Balance Sheet Data
Total loans, gross
(1)
$
1,603,169
$
804,003
$
135,123
$
1,509
$
15,277
$
2,559,081
Total assets
1,546,505
788,764
125,349
5,204
434,565
2,900,387
Total funds borrowed
1,258,773
642,012
102,027
4,236
353,713
2,360,761
Selected Financial Ratios
Return on average assets
2.44
%
2.24
%
0.89
%
133.67
%
(
2.03
)%
1.88
%
Return on average stockholders' equity
*
*
*
*
*
7.85
Return on average equity
13.69
12.59
5.19
748.44
(
11.39
)
10.73
Interest yield
13.45
10.11
13.24
22.66
NM
11.92
Net interest margin, gross
10.06
6.48
9.05
18.68
NM
8.21
Net interest margin, net of allowance
10.58
6.65
9.84
23.84
NM
8.56
Reserve coverage
(2)
5.10
2.55
8.43
21.35
NM
4.47
Delinquency status
(3)
0.57
0.16
13.99
—
NM
1.16
Charge-off (recovery) ratio
(4)
3.36
1.03
3.38
(
417.16
)
NM
2.26
(1)
Inclusive of recreation and strategic partnership loans held for sale, at lower of amortized cost or fair value.
(2)
Allowance for credit loss
as a percent of gross loans held for investment and excludes loans held for sale.
(3)
Loans
90 days or more past due as a percent of total loans.
(4)
Charge-off ratio in the recreation lending segment was
3.23
%
when including loans held for sale.
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page
29
of 66
The following table presents segment data as of and for the nine months ended September 30, 2025.
Nine Months Ended September 30, 2025
Consumer Lending
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Lending
Taxi Medallion
Lending
Corporate and Other Investments
Consolidated
Total interest income
$
155,132
$
60,357
$
11,325
$
243
$
6,580
$
233,637
Total interest expense
38,382
21,633
3,462
66
9,627
73,170
Net interest income (loss)
116,750
38,724
7,863
177
(
3,047
)
160,467
Provision (benefit) for credit losses
48,914
8,904
7,440
(
3,126
)
—
62,132
Net interest income (loss) after credit loss provision
67,836
29,820
423
3,303
(
3,047
)
98,335
Other income, net
1,853
7
16,260
3,373
2,365
23,858
Operating expenses
(
30,094
)
(
14,285
)
(
4,372
)
(
2,643
)
(
11,612
)
(
63,006
)
Net income (loss) before taxes
39,595
15,542
12,311
4,033
(
12,294
)
59,187
Income tax (provision) benefit
(
12,296
)
(
4,827
)
(
3,823
)
(
1,253
)
3,819
(
18,380
)
Net income (loss) after taxes
$
27,299
$
10,715
$
8,488
$
2,780
$
(
8,475
)
$
40,807
Income attributable to the non-controlling interest
6,446
Redemption of non-controlling interest
3,515
Total net income attributable to Medallion Financial Corp.
$
30,846
Balance Sheet Data
Total loans, gross
(1)
$
1,603,169
$
804,003
$
135,123
$
1,509
$
15,277
$
2,559,081
Total assets
1,546,505
788,764
125,349
5,204
434,565
2,900,387
Total funds borrowed
1,258,773
642,012
102,027
4,236
353,713
2,360,761
Selected Financial Ratios
Return on average assets
2.42
%
1.80
%
9.73
%
60.34
%
(
2.51
)%
1.91
%
Return on average stockholders' equity
*
*
*
*
*
10.71
Return on average equity
14.21
10.57
58.17
355.24
(
14.71
)
11.41
Interest yield
13.37
9.95
12.48
19.60
NM
11.75
Net interest margin, gross
10.06
6.38
8.69
14.46
NM
8.07
Net interest margin, net of allowance
10.56
6.55
9.33
18.90
NM
8.39
Reserve coverage
(2)
5.10
2.55
8.43
21.35
NM
4.47
Delinquency status
(3)
0.57
0.16
13.99
—
NM
1.16
Charge-off (recovery) ratio
(4)
3.74
1.48
1.36
(
237.51
)
NM
2.60
(1)
Inclusive of recreation and strategic partnership loans held for sale, at lower of amortized cost or fair value.
(2)
Allowance for credit loss
as a percent of gross loans held for investment and excludes loans held for sale.
(3)
Loans
90 days or more past due as a percent of total loans.
(4)
Charge-off ratio in the recreation lending segment was
3.58
%
when including loans held for sale.
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page
30
of 66
The following table presents segment data as of and for the three months ended September 30, 2024.
Three Months Ended September 30, 2024
Consumer Lending
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Lending
Taxi Medallion
Lending
Corporate and Other Investments
Consolidated
Total interest income
$
51,443
$
19,008
$
3,761
$
184
$
2,013
$
76,409
Total interest expense
12,566
7,033
1,063
30
2,980
23,672
Net interest income (loss)
38,877
11,975
2,698
154
(
967
)
52,737
Provision (benefit) for credit losses
17,494
4,855
252
(
2,450
)
—
20,151
Net interest income (loss) after credit loss provision
21,383
7,120
2,446
2,604
(
967
)
32,586
Other income (loss), net
200
2
(
414
)
321
478
587
Operating expenses
(
11,853
)
(
5,746
)
(
1,235
)
(
1,444
)
1,283
(
18,995
)
Net income before taxes
9,730
1,376
797
1,481
794
14,178
Income tax provision
(
2,810
)
(
290
)
(
159
)
(
457
)
(
339
)
(
4,055
)
Net income after taxes
$
6,920
$
1,086
$
638
$
1,024
$
455
$
10,123
Income attributable to the non-controlling interest
1,512
Total net income attributable to Medallion Financial Corp.
$
8,611
Balance Sheet Data
Total loans, gross
$
1,554,629
$
814,071
$
110,143
$
3,243
$
3,193
$
2,485,279
Total assets
1,505,400
798,261
105,232
6,208
464,951
2,880,052
Total funds borrowed
1,253,224
664,541
87,604
5,168
387,066
2,397,603
Selected Financial Ratios
Return on average assets
1.81
%
0.55
%
2.41
%
50.54
%
0.41
%
1.43
%
Return on average stockholders' equity
*
*
*
*
*
9.61
Return on average equity
13.35
3.86
16.38
302.61
2.57
9.46
Interest yield
13.34
9.51
13.57
21.96
NM
11.75
Net interest margin, gross
10.08
5.99
9.74
18.38
NM
8.11
Net interest margin, net of allowance
10.55
6.14
10.19
30.60
NM
8.42
Reserve coverage
(1)
4.53
2.42
4.64
39.78
NM
3.88
Delinquency status
(2)
0.50
0.19
7.39
—
NM
0.72
Charge-off (recovery) ratio
(3)
3.18
1.76
—
(
279.58
)
NM
2.18
(1)
Inclusive of recreation and strategic partnership loans held for sale, at lower of amortized cost or fair value.
(2)
Loans
90 days or more past due as a percent of total loans.
(3)
Net
charge-offs as a percent of annual average total gross loans.
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page
31
of 66
The following table presents segment data as of and for the nine months ended September 30, 2024.
Nine Months Ended September 30, 2024
Consumer Lending
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Lending
Taxi Medallion
Lending
Corporate and Other Investments
Consolidated
Total interest income
$
142,860
$
54,106
$
10,944
$
514
$
5,759
$
214,183
Total interest expense
33,171
18,773
3,217
83
8,417
63,661
Net interest income (loss)
109,689
35,333
7,727
431
(
2,658
)
150,522
Provision (benefit) for credit losses
50,319
9,032
946
(
4,368
)
—
55,929
Net interest income (loss) after credit loss provision
59,370
26,301
6,781
4,799
(
2,658
)
94,593
Other income, net
756
7
3,774
1,294
1,258
7,089
Operating expenses
(
31,376
)
(
15,317
)
(
3,657
)
(
3,560
)
(
3,305
)
(
57,215
)
Net income (loss) before taxes
28,750
10,991
6,898
2,533
(
4,705
)
44,467
Income tax (provision) benefit
(
9,178
)
(
3,509
)
(
2,202
)
(
809
)
1,502
(
14,196
)
Net income (loss) after taxes
$
19,572
$
7,482
$
4,696
$
1,724
$
(
3,203
)
$
30,271
Income attributable to the non-controlling interest
4,535
Total net income attributable to Medallion Financial Corp.
$
25,736
Balance Sheet Data
Total loans, gross
$
1,554,629
$
814,071
$
110,143
$
3,243
$
3,193
$
2,485,279
Total assets
1,505,400
798,261
105,232
6,208
464,951
2,880,052
Total funds borrowed
1,253,224
664,541
87,604
5,168
387,066
2,397,603
Selected Financial Ratios
Return on average assets
1.87
%
1.31
%
5.92
%
26.64
%
(
0.96
)%
1.51
%
Return on average stockholders' equity
*
*
*
*
*
9.79
Return on average equity
12.78
8.69
38.63
155.33
(
6.24
)
9.62
Interest yield
13.32
9.38
13.20
20.59
NM
11.54
Net interest margin, gross
10.23
6.12
9.32
16.65
NM
8.11
Net interest margin, net of allowance
10.65
6.26
9.69
27.99
NM
8.41
Reserve coverage
(1)
4.53
2.42
4.64
39.78
NM
3.88
Delinquency status
(2)
0.50
0.19
7.39
—
NM
0.72
Charge-off (recovery) ratio
(3)
3.48
1.78
(
0.02
)
(
159.26
)
NM
2.51
(1)
Allowance for credit loss
as a percent of gross loans held for investment and excludes loans held for sale.
(2)
Loans
90 days or more past due as a percent of total loans.
(3)
Net
charge-offs as a percent of annual average total gross loans.
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page
32
of 66
(10) COMMITMENTS AND CONTINGENCIES
(A) EMPLOYMENT AGREEMENTS
The Company has employment agreements with certain key officers, including Mr. Alvin Murstein and Mr. Andrew Murstein, for either a one-, two-, or three-year term. Typically, the contracts will renew for new one-, two- or three- year terms unless prior to the term either the Company or the executive provides notice to the other party of its intention not to extend the employment period beyond the current one-, two- or three-year term (as applicable); however, there is currently one agreement that renews after two years for additional one-year terms and one agreement with a three-year term that does not have a renewal period. In the event of a change in control, as defined, during the employment period, the agreements provide for severance compensation to the executive in an amount equal to the balance of the salary, bonus, and value of fringe benefits which the executive would be entitled to receive for the remainder of the employment period.
On October 24, 2025, Mr. Alvin Murstein, the Chairman of the Board of Directors, or the Board, and Chief Executive Officer of the Company, entered into an amendment to the First Amended and Restated Employment Agreement, dated May 29, 1998, as between him and the Company. Pursuant to such amendment: (i) effective as of January 31, 2026 (the “Transition Date”), Mr. Murstein shall no longer be the Chief Executive Officer and shall become the Executive Chairman of the Board through May 29, 2027 (the “Term”); (ii) during the period between the date of such amendment and the Transition Date, Mr. Murstein shall, among other things, continue to serve as Chief Executive Officer of the Company; (iii) during the period from the Transition Date until the end of the Term (the “Retirement Date”), Mr. Murstein shall, among other things, continue to serve as Executive Chairman of the Board with the Company's expectation that Mr. Murstein will be nominated to serve a new three-year term as a Board member at the 2026 Annual Meeting of Shareholders of the Company and a failure by the Board to so nominate Mr. Murstein would constitute termination without cause under his employment agreement; (iv) Mr. Murstein shall remain an employee of the Company in his role as Executive Chairman of the Board; (v) Mr. Murstein's compensation shall be determined without regard to the transition to Executive Chairman, provided that, all incentive equity awards that are determined to be granted to Mr. Murstein in respect of calendar years 2025, 2026 and 2027 shall be granted solely in the form of restricted stock and options; and (vi) on the Retirement Date (or earlier if termination occurs by reason of death or disability), all outstanding unvested equity awards, other than performance awards, will immediately vest and, if applicable, become exercisable and all outstanding performance awards will remain outstanding until the end of the relevant performance periods and vest and be earned to the extent applicable objects have been met, on a prorated basis for the portion of the performance period that Mr. Murstein was employed.
In addition, on October 24, 2025, Mr. Andrew Murstein, the Company’s President and Chief Operating Officer, entered into an amendment to the First Amended and Restated Employment Agreement, dated May 29, 1998, as amended, between him and the Company. Pursuant to such amendment, effective as of January 31, 2026, Mr. Andrew Murstein shall become the President, Chief Executive Officer and Chief Operating Officer of the Company and shall remain President, Chief Executive Officer and Chief Operating Officer through the remainder of the employment term.
As of September 30, 2025
,
employment agreements expire at various dates through 2028
, with future minimum payments under these agreements of approximately $
7.7
million.
(B) OTHER COMMITMENTS
As of September 30, 2025
, the Company had
no
other commitments. Generally, any commitments would be on the same terms as loans to or investments in existing borrowers or investees, and generally have fixed expiration dates. Since some commitments would be expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
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(C) SEC LITIGATION
On December 29, 2021, the
SEC filed a civil complaint in the U.S. District Court for the Southern District of New York against the Company and its President and Chief Operating Officer alleging certain violations of the anti-fraud, books and records, internal controls and anti-touting provisions of the federal securities laws. The litigation related to certain issues that occurred during the period 2015 to 2017, including (i) the Company’s retention of third parties in 2015 and 2016 concerning posting information about the Company on certain financial websites and (ii) the Company’s financial reporting and disclosures concerning certain assets, including Medallion Bank, in 2016 and 2017, a period when the Company had previously reported as a business development company (BDC) under the Investment Company Act of 1940. In December 2024, the Company and its President and Chief Operating Officer reached an agreement in principle with the Division of Enforcement of the SEC, that if approved by the Commissioners of the SEC and the Court, would resolve this litigation. On May 30, 2025, the Court entered a Final Judgment as to the Company and its President and Chief Operating Officer resolving this litigation. The parties agreed to settle the matter with the SEC, consenting to the entry of the Final Judgment, without admitting or denying the allegations of the SEC complaint. Pursuant to the Final Judgment, among other things, (i) the parties were enjoined from violating specified provisions of the federal securities laws and rules thereunder, (ii) the Company paid a civil penalty of $
3,000,000
(which amount was previously accrued in the fourth quarter of 2024) and (iii) the Company agreed to certain compliance-related undertakings.
(D) OTHER LITIGATION AND REGULATORY MATTERS
The Company and its subsidiaries are subject to inquiries from certain regulators and are currently involved in various legal proceedings incident to the normal course of business, including collection matters with respect to certain loans. The Company intends to vigorously defend any outstanding claims and pursue its legal rights. In the opinion of management, based on the advice of legal counsel, there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision could result in a material adverse impact on the financial condition or results of operations of the Company.
(11) RELATED PARTY TRANSACTIONS
Certain directors, officers, and stockholders of the Company are also directors and officers of its main consolidated subsidiaries, MFC, Medallion Capital, Freshstart, and the Bank, as well as other subsidiaries. Officer salaries are set by the Board of Directors of the Company.
Jeffrey Rudnick, the son of one of the Company’s directors, previously
served as the Company’s Senior Vice President and effective July 24, 2025, serves as the Company's Executive Vice President at a salary of $
269,000
per year, an increase from $
260,988
per year in
2024
. Mr. Rudnick received an annual cash bonus of $
75,000
and $
95,000
as well as an equity bonus in the amount of $
50,000
and $
52,000
during the
nine months ended September 30, 2025 and 2024
.
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34
of 66
(12) FAIR VALUE OF FINANCIAL INSTRUMENTS
FASB ASC Topic 825, “Financial Instruments,” requires disclosure of fair value information about certain financial instruments, whether assets, liabilities, or off-balance-sheet commitments, if practicable. The following methods and assumptions were used to estimate the fair value of each class of financial instrument. Fair value estimates that were derived from broker quotes cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.
(a)
Cash and cash equivalents –
Book value equals fair value.
(b)
Investment securities –
The Company’s investments are recorded at the estimated fair value of such investments.
(c)
Loans receivable –
A discounted cash flow method under the income approach is utilized to estimate the market value of the loan portfolio. The discounted cash flow method relies upon assumptions about the amount and timing of scheduled principal and interest payments, principal prepayments, and current market rates. The loan portfolio is aggregated into categories based on loan type and credit quality. For each loan category, weighted average statistics, such as coupon rate, age, and remaining term are calculated. These are Level 3 valuations.
(d)
Loans held for sale –
Loans held for sale consist of recreation loans and strategic partnership loans intended to be sold on the secondary market. Loans held for sale are recorded at the lower of amortized cost or fair value.
(e) Accrued interest receivable –
Book value equals market value.
(f)
Floating
rate
borrowings –
Due to the short-term nature of these instruments, the carrying amount approximates fair value.
(g)
Fixed
rate
borrowings –
The fair value for certificates of deposit is estimated by using discounted cash flow analyses, based on market spreads to benchmark rates, and are considered Level 2 valuations.
(h) Accrued interest payable –
Due to the short-term nature of these instruments, the carrying amount approximates fair value.
(i)
Commitments
to
extend
credit –
The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and present creditworthiness of the counter parties. For fixed rate loan commitments, fair value also includes a consideration of the difference between the current levels of interest rates and the committed rates. As of September 30, 2025 and December 31, 2024, the estimated fair value of these off-balance-sheet instruments was not material.
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35
of 66
The following tables present the carrying amounts and fair values of the Company’s financial instruments as of
September 30, 2025 and December 31, 2024.
September 30, 2025
(Dollars in thousands)
Carrying
Amount
Fair
Value
Level 1
Level 2
Level 3
Financial assets
Cash, cash equivalents, and federal funds sold
(1)
$
150,978
$
150,978
$
150,228
$
750
$
—
Investment securities
61,081
61,081
—
61,081
—
Loans held for investment, net of allowance
2,375,110
2,341,727
—
—
2,341,727
Loans held for sale, at lower of amortized cost or fair value
72,918
75,872
—
—
75,872
Accrued interest receivable
16,973
16,973
16,973
—
—
Equity securities
(2)
1,780
1,780
1,780
—
—
Financial liabilities
Funds borrowed
(3)
2,366,011
2,385,116
—
2,385,116
—
Accrued interest payable
5,290
5,290
5,290
—
—
(1)
Includes federal funds sold and interest bearing deposits in other banks.
(2)
Included within other assets on the balance sheet.
(3)
Excludes deferred financing costs of
$
9.0
million
.
December 31, 2024
(Dollars in thousands)
Carrying
Amount
Fair
Value
Level 1
Level 2
Level 3
Financial assets
Cash, cash equivalents, and federal funds sold
(1)
$
169,572
$
169,572
$
168,322
$
1,250
$
—
Investment securities
54,805
54,805
—
54,805
—
Loans held for investment, net of allowance
2,265,428
2,238,645
—
—
2,238,645
Loans held for sale, at lower of amortized cost or fair value
128,226
133,244
—
—
133,244
Accrued interest receivable
15,314
15,314
15,314
—
—
Equity securities
(2)
1,732
1,732
1,732
—
—
Financial liabilities
Funds borrowed
(3)
2,379,413
2,371,434
—
2,371,434
—
Accrued interest payable
8,231
8,231
8,231
—
—
(1)
Includes federal funds sold and interest bearing deposits in other banks.
(2)
Included within other assets on the balance sheet.
(3)
Excludes deferred financing costs of
$
8.2
million
.
(13) FAIR VALUE OF ASSETS AND LIABILITIES
The Company follows the provisions of FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements.
In accordance with FASB ASC 820, the Company has categorized its assets and liabilities measured at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The Company's assessment and classification of an investment within a level can change over time based upon maturity or liquidity of the investment and would be reflected at the beginning of the quarter in which the change occurred.
As required by FASB ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a level 3 fair value measurement may include inputs that are observable (levels 1 and 2) and unobservable (level 3). Therefore, gains and losses for such assets and liabilities categorized within the level 3 table below may include changes in fair value that are attributable to both observable inputs (levels 1 and 2) and unobservable inputs (level 3).
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36
of 66
Assets and liabilities measured at fair value, recorded on the consolidated balance sheets, are categorized based on the inputs to the valuation techniques as follows:
Level 1.
Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, most U.S. Government and agency securities, and certain other sovereign government obligations).
Level 2.
Assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
a)
Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);
b)
Quoted price for identical or similar assets or liabilities in non-active markets (for example, corporate and municipal bonds, which trade infrequently);
c)
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and
d)
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability (examples include certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).
Level 3.
Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the assets or liability (examples include certain private equity investments, and certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).
A review of fair value hierarchy classification is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain assets or liabilities. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in/out of the level 3 category as of the beginning of the quarter in which the reclassifications occur.
Equity investments were recorded at cost less impairment plus or minus observable price changes. Commencing in 2020, the Company elected to measure equity investments at fair value on a non-recurring basis.
The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of
September 30, 2025 and December 31, 2024.
September 30, 2025
(Dollars in thousands)
Level 1
Level 2
Level 3
Total
Assets
Investment securities
(1)
$
—
$
61,081
$
—
$
61,081
Equity securities
(2)
1,780
—
—
1,780
Total
$
1,780
$
61,081
$
—
$
62,861
(1)
Total unrealized gains of $
0.7
million and $
1.2
million, net of tax, related to these assets was included in other comprehensive income for the
three and nine months ended September 30, 2025
.
(2)
Included within other assets on the balance sheet.
December 31, 2024
(Dollars in thousands)
Level 1
Level 2
Level 3
Total
Assets
Investment securities
(1)
$
—
$
54,805
$
—
$
54,805
Equity securities
(2)
1,732
—
—
1,732
Total
$
1,732
$
54,805
$
—
$
56,537
(1)
Total unrealized losses of less than $
0.1
million, net of tax, related to these assets was included in other comprehensive income for the year ended
December 31, 2024
.
(2)
Included within other assets on the balance sheet.
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37
of 66
The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of
September 30, 2025 and December 31, 2024.
September 30, 2025
(Dollars in thousands)
Level 1
Level 2
Level 3
Total
Assets
Equity investments
$
—
$
—
$
—
$
—
Total
$
—
$
—
$
—
$
—
December 31, 2024
(Dollars in thousands)
Level 1
Level 2
Level 3
Total
Assets
Equity investments
$
—
$
—
$
1,374
$
1,374
Total
$
—
$
—
$
1,374
$
1,374
Significant Unobservable Inputs
ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as level 3 within the fair value hierarchy. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.
The valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of
September 30, 2025 and December 31, 2024.
(Dollars in thousands)
Fair Value
at September 30, 2025
Valuation Techniques
Unobservable Inputs
Range
(Weighted Average)
Equity investments
$
—
Investee financial analysis
Financial condition and operating performance of the borrower
(1)
N/A
(1)
Includes projections based on revenue, EBITDA, leverage and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(Dollars in thousands)
Fair Value
at December 31, 2024
Valuation Techniques
Unobservable Inputs
Range
(Weighted Average)
Equity investments
$
1,374
Investee financial analysis
Financial condition and operating performance of the borrower
(1)
N/A
(1)
Includes
projections based on revenue, EBITDA, leverage and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(14) MEDALLION BANK PREFERRED STOCK (Non-controlling interest)
On May 29, 2025, the Bank closed an initial public offering of
3,100,000
shares of its Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series G, with a $
77.5
million aggregate liquidation amount, or $
25
per share, yielding net proceeds of $
73.1
million. Dividends are payable quarterly from the date of issuance to, but excluding July 1, 2030, at a fixed rate equal to
9.00
% per annum, and from and including July 1, 2030, during each reset period at a rate equal to the
five-year U.S. Treasury rate plus a
spread
of
4.94
% per annum.
On December 17, 2019, the Bank closed an initial public offering of
1,840,000
shares of its Series F Preferred Stock with a $
46.0
million aggregate liquidation amount, or $
25
per share, yielding net proceeds of $
42.5
million. Dividends were payable quarterly from the date of issuance to, but excluding, April 1, 2025, at a rate of
8
% per annum, and from and including April 1, 2025, at a floating rate equal to
three-month Term 90-day
SOFR
plus a
spread
of
6.46
% per annum.
On July 1, 2025, the Bank redeemed its Series F Preferred Stock, in its entirety, at an aggregate redemption price of $
46.0
million.
Upon redemption, the Company incurred a charge of approximately $
3.5
million in calculating earnings attributable to common shareholders representing the excess of the redemption price over the carrying amount of $
42.5
million.
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38
of 66
On July 21, 2011, the Bank issued, and the
U.S. Treasury purchased
,
26,303
shares of Senior Non-Cumulative Perpetual Preferred Stock, Series E for an aggregate purchase price of $
26.3
million under the Small Business Lending Fund Program, or SBLF, with a liquidation amount of $
1,000
per share. The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified smaller banks at favorable rates. The Bank pays a dividend rate of
9
% on the Series E.
(15) SUBSEQUENT EVENTS
On October 24, 2025, Mr. Alvin Murstein and Mr. Andrew Murstein entered into amendments to their respective employment agreements with the Company and related executive transition. See Note 10 “Commitments and Contingencies” subsection (a) to the consolidated financial statements.
The Company has evaluated the effects of events that have occurred subsequent to September 30, 2025 through the date of financial statement issuance for potential recognition or disclosure.
As of such date, there were no additional subsequent events that required recognition or disclosure.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three and nine months ended September 30, 2025 and the year ended December 31, 2024. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors section in our Annual Report on Form 10-K.
COMPANY BACKGROUND
We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary that originates consumer loans for the purchase of recreational vehicles, boats, collector cars, and home improvements, and provides loan origination and other services to financial technology, or fintech, partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of September 30, 2025, our consumer loans represented 94% of our gross loan portfolio, inclusive of loans held for sale, and commercial loans represented 5%. Total assets were $2.90 billion and $2.87 billion as of September 30, 2025 and December 31, 2024.
Our loan-related earnings depend primarily on our level of net interest income. Net interest income is the difference between the total yield on our loan portfolio and the average cost of borrowed funds. We fund our operations through a wide variety of interest-bearing sources, including bank certificates of deposit issued to consumers, debentures issued to and guaranteed by the SBA, privately placed notes, trust preferred securities, and preferred stock of the Bank. Net interest income fluctuates with changes in the yield on our loan portfolios and changes in the cost of borrowed funds, as well as changes in the amount of interest-earning assets and interest-bearing liabilities held by us.
Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, the impact of tariffs, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation, the risk of recession and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products. We have been, and continue to, seek borrowers with strong credit ratings and moderate the pace of our recent growth in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment.
We also provide debt, mezzanine, and equity investment capital to companies in a variety of commercial industries. These investments may be venture capital style investments which may not be fully collateralized. Our investments are typically in the form of secured debt instruments with fixed interest rates accompanied by an equity stake or warrants to purchase an equity interest for a nominal exercise price (such warrants are included in equity investments on the consolidated balance sheets). Interest income is earned on the debt instruments.
The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit. To take advantage of this low cost of funds, historically we referred a portion of our taxi medallion and commercial loans to the Bank, which originated these loans, and have since been serviced by Medallion Servicing Corp., or MSC. However, other than in connection with dispositions of existing taxi medallion assets, the Bank has not originated any new taxi medallion loans since 2014 (and Medallion Financial Corp. has not originated any new taxi medallion loans since 2015) and is working with MSC to service its remaining portfolio, as it winds down. MSC earns referral and servicing fees for these activities.
In 2019, the Bank launched a strategic partnership program to provide lending and other services to fintech companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank continues to evaluate and launch additional partnership programs with fintech companies.
We continue to consider various alternatives for the Bank, which may include an initial public offering of its common stock, the sale of all or part of the Bank, a spin-off or other potential transaction. We do not have a deadline for its consideration of these alternatives, and there can be no assurance that this process will result in any transaction being announced or consummated.
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40
of 66
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are fundamental to understanding management's discussion and analysis of its financial condition and results of operations. At September 30, 2025, we identified our policies for the allowance for credit losses and goodwill and intangible assets to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Our critical accounting policies are described in detail in Part I, Item 7 in Medallion Financial Corp.'s Annual Report on Form 10-K for the year ended December 31, 2024, and there have been no material changes in such policies and estimates since the date of such report.
RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS
In December 2023, the FASB issued ASU 2023-09, Income Taxes, or Topic 740: Improvements to Income Tax Disclosures. The main objective of this update is to improve financial reporting disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update are effective for the annual periods beginning after December 15, 2024. We do not expect this update to have a material impact on the financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income - Expense
Disaggregation
of Income Statement Expenses. This update requires additional disaggregation of specific types of expenses within the notes to consolidated financial statements on an annual and interim basis. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt ASU 2024-03 beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are assessing the impact of the update on the accompanying financial statements.
CONTROL STATUTES AND REGULATIONS
Because the Bank is an “insured depository institution” within the meaning of the Federal Deposit Insurance Act and the Change in Bank Control Act as well as Medallion Financial Corp. being a “financial institution holding company” within the meaning of the Utah Financial Institutions Act, federal and Utah law and regulations prohibit any person or company from acquiring control of the Bank or Medallion Financial Corp., without, in most cases, prior written approval of the FDIC or the Commissioner of the Utah Department of Financial Institutions, as applicable. Under the Change in Bank Control Act, control is conclusively presumed if, among other things, a person or company acquires 25% or more of any class of the Bank’s voting stock. A rebuttable presumption of control arises if a person or company acquires 10% or more of any class of voting stock and is subject to a number of specified “control factors” as set forth in the applicable regulations.
Although the Bank is an “insured depository institution” within the meaning of the Federal Deposit Insurance Act and the Change in Bank Control Act, your investment in the Company is not insured or guaranteed by the FDIC, or any other agency, and is subject to loss.
Under the Utah Financial Institutions Act, control is defined as the power, directly or indirectly, or through or in concert with one or more persons to: (a) direct or exercise a controlling influence over (i) the management or policies of a financial institution or (ii) the election of a majority of the directors or trustees of an institution; or (b) to vote 25% or more of any class of voting securities of a financial institution. In addition, under Utah law, there is a rebuttable presumption that a person has control of a Utah financial institution if the person has the power, directly or indirectly, or through or in concert with one or more persons, to vote more than 10% but less than 25% of any class of voting securities of a financial institution. If any holder of any series of the Bank’s preferred stock is or becomes entitled to vote for the election of the Bank’s directors, such series will be deemed a class of voting stock, and any other person will be required to obtain the non-objection of the FDIC under the Change in Bank Control Act to acquire or maintain 10% or more of that series. Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our common stock in excess of the amount which can be acquired without regulatory approval.
In addition to the regulations detailed above, our operations are subject to supervision and regulation by other federal, state, and local laws and regulations. Additionally, our operations may be subject to various laws and judicial and administrative decisions. This oversight may serve to:
•
regulate credit granting activities, including establishing licensing requirements, if any, in various jurisdictions;
•
establish maximum interest rates, finance charges and other charges;
•
require disclosures to customers;
•
govern secured transactions;
•
set collection, foreclosure, repossession, and claims handling procedures and other trade practices;
•
prohibit discrimination in the extension of credit and administration of loans; and
•
regulate the use and reporting of information related to a borrower’s credit experience and other data collection.
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41
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Changes to laws of states in which we do business could affect the operating environment in substantial and unpredictable ways. We cannot predict whether such changes will occur or, if they occur, the ultimate effect they would have upon our financial condition or results of operations.
AVERAGE BALANCES AND RATES
The
following table presents our consolidated average balance sheets, interest income and expense, and the average interest earning/bearing assets and liabilities, and which reflect the average yield on assets and average costs on liabilities as of and for the three months ended September 30, 2025 and 2024.
Three Months Ended September 30,
2025
2024
(Dollars in thousands)
Average
Balance
Interest
Average
Yield/Cost
Average
Balance
Interest
Average
Yield/Cost
Interest-earning assets
Interest earning cash equivalents
$
22,094
$
177
3.18
%
$
34,880
$
424
4.84
%
Federal funds sold
71,673
1,046
5.79
55,577
877
6.28
Investment securities
60,900
614
4.00
55,711
570
4.07
Loans
Recreation
1,579,820
53,565
13.45
1,534,544
51,444
13.34
Home improvement
802,745
20,453
10.11
795,459
19,007
9.51
Commercial
130,486
4,354
13.24
110,224
3,816
13.77
Taxi medallion
1,593
91
22.66
3,334
173
20.64
Strategic partnerships
12,794
471
14.67
2,325
98
16.77
Total loans
2,527,438
78,934
12.39
2,445,886
74,538
12.12
Total interest-earning assets, before allowance
2,682,105
11.92
2,592,054
11.75
Allowance for credit losses
(108,719
)
(94,293
)
Total interest-earning assets, net of allowance
$
2,573,386
$
80,771
12.43
%
$
2,497,761
$
76,409
12.17
%
Non-interest-earning assets
Cash
49,133
62,956
Equity investments
8,903
10,374
Loan collateral in process of foreclosure
8,517
8,996
Goodwill and intangible assets
169,048
170,493
Other assets
61,459
57,599
Total non-interest-earning assets
297,060
310,418
Total assets
$
2,870,446
$
2,808,179
Interest-bearing liabilities
Deposits
$
2,066,763
$
20,502
3.94
%
$
2,079,068
$
19,191
3.67
%
Privately placed notes
146,500
3,166
8.57
144,000
3,124
8.63
SBA debentures and borrowings
77,750
855
4.36
71,500
710
3.95
Trust preferred securities
33,000
562
6.76
33,000
647
7.79
Total interest-bearing liabilities
2,324,013
25,085
4.28
2,327,568
23,672
4.05
Non-interest-bearing liabilities
Deferred tax liability
18,985
20,903
Other liabilities
(1)
23,872
33,981
Total non-interest-bearing liabilities
42,857
54,884
Total liabilities
2,366,870
2,382,452
Non-controlling interest
11,201
69,166
Total stockholders’ equity
392,375
356,561
Total liabilities and stockholders’ equity
$
2,770,446
$
2,808,179
Net interest income
$
55,686
$
52,737
Net interest margin, gross
8.21
8.11
Net interest margin, net of allowance
8.56
%
8.42
%
(1)
Includes deferred financing costs of $9.0 million and $8.4 million as of September 30, 2025 and 2024.
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42
of 66
The following table presents our consolidated average balance sheets, interest income and expense, and the average interest earning/bearing assets and liabilities, and which reflect the average yield on assets and average costs on liabilities as of and for the nine months ended September 30, 2025 and 2024.
Nine Months Ended September 30,
2025
2024
(Dollars in thousands)
Average
Balance
Interest
Average
Yield/Cost
Average
Balance
Interest
Average
Yield/Cost
Interest-earning assets
Interest earning cash equivalents
$
31,321
$
896
3.82
%
$
31,428
$
1,044
4.44
%
Federal funds sold
67,537
2,817
5.58
67,149
2,954
5.88
Investment securities
59,745
1,726
3.86
54,800
1,565
3.81
Loans
Recreation
1,551,859
155,132
13.37
1,432,792
142,860
13.32
Home improvement
810,918
60,357
9.95
770,680
54,106
9.38
Commercial
120,964
11,292
12.48
110,717
10,946
13.21
Taxi medallion
1,637
243
19.60
3,458
493
19.04
Strategic partnerships
10,282
1,174
15.30
1,489
215
19.29
Total loans
2,495,660
228,198
12.23
2,319,136
208,620
12.02
Total interest-earning assets, before allowance
2,654,263
11.75
2,472,513
11.54
Allowance for credit losses
(103,312
)
(80,212
)
Total interest-earning assets, net of allowance
$
2,550,951
$
233,637
12.23
%
$
2,392,301
$
214,183
11.96
%
Non-interest-earning assets
Cash
51,542
41,452
Equity investments
8,907
11,628
Loan collateral in process of foreclosure
9,011
9,934
Goodwill and intangible assets
169,409
170,854
Other assets
57,139
55,785
Total non-interest-earning assets
296,008
289,653
Total assets
$
2,846,959
$
2,681,954
Interest-bearing liabilities
Deposits
$
2,064,744
$
59,725
3.87
%
$
1,960,140
$
50,466
3.44
%
Privately placed notes
146,500
9,516
8.68
140,400
9,085
8.64
SBA debentures and borrowings
72,325
2,247
4.15
72,750
2,167
3.98
Trust preferred securities
33,000
1,682
6.81
33,000
1,943
7.86
Total interest-bearing liabilities
2,316,569
73,170
4.22
2,206,290
63,661
3.86
Non-interest-bearing liabilities
Deferred tax liability
19,686
21,537
Other liabilities
(1)
32,380
33,840
Total non-interest-bearing liabilities
52,066
55,377
Total liabilities
2,368,635
2,261,667
Non-controlling interest
93,420
69,241
Total stockholders’ equity
384,904
351,046
Total liabilities and stockholders’ equity
$
2,846,959
$
2,681,954
Net interest income
$
160,467
$
150,522
Net interest margin, gross
8.07
8.11
Net interest margin, net of allowance
8.39
%
8.41
%
(1)
Includes deferred financing costs of $9.0 million and $8.4 million as of September 30, 2025 and 2024.
For the three months ended September 30, 2025, our total loans yielded 12.39%, as compared to 12.12% for the three months ended September 30, 2024. The 27 basis point increase primarily reflects a higher yield on our loan portfolios, as we continued to charge higher rates on new consumer originations over what we had charged in past years as prevailing market interest rates remained high. Similarly, for the nine months ended September 30, 2025, our total loans yielded 12.23%, as compared to 12.02% for the nine months ended September 30, 2024. We have continued to use the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, as well as seek to maintain the credit quality of our new issuances, particularly in our recreation segment, with the weighted average FICO scores, measured at origination, of our outstanding recreation loans being 685 (685 exclusive of loans held for sale) as of September 30, 2025, consistent with outstanding recreation loans as of September 30, 2024. We use weighted average FICO scores as an indicator of portfolio risk.
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43
of 66
Our debt, with certificates of deposit being our largest source, funds our growing lending business. Our average interest cost for the three and nine months ended September 30, 2025 of 4.28% and 4.22% increased 23 and 36 basis points from the three and nine months ended September 30, 2024, attributable to the current higher interest rate environment, particularly the higher cost associated with our deposits. To the extent that prevailing market interest rates remain at current levels, we expect our cost of funds to continue to increase as we issue new certificates of deposit to replace maturing certificates of deposit and fund our growth. During the three months ended September 30, 2025, we issued deposits at rates up to 3.98% and 4.03% for three and five year certificates of deposit with the most recent three and five year certificates of deposit issued at rates of 3.73% and 3.78%. As described above, we have taken, and continue to take, steps to pass along a portion of the interest rate increases on newly originated loans, the process for which is slower than the pace of funding cost increases, thereby compressing our net interest margins.
RATE/VOLUME ANALYSIS
The following tables present the change in interest income and expense due to changes in the average balances (volume) and average rates, calculated for the periods indicated.
Three Months Ended September 30,
2025
2024
(Dollars in thousands)
Increase
(Decrease)
In Volume
Increase
(Decrease)
In Rate
Net Change
Increase
(Decrease)
In Volume
Increase
(Decrease)
In Rate
Net Change
Interest-earning assets
Interest earning cash and cash equivalents
$
43
$
(121
)
$
(78
)
$
187
$
335
$
522
Investment securities
52
(8
)
44
12
86
98
Loans
Recreation
1,535
588
2,123
6,377
725
7,102
Home improvement
186
1,260
1,446
1,255
1,174
2,429
Commercial
676
(139
)
537
389
180
569
Taxi medallion
(99
)
17
(82
)
(27
)
(143
)
(170
)
Strategic partnerships
385
(13
)
372
28
(55
)
(27
)
Total loans
$
2,683
$
1,713
$
4,396
$
8,022
$
1,881
$
9,903
Total interest-earning assets
$
2,778
$
1,584
$
4,362
$
8,221
$
2,302
$
10,523
Interest-bearing liabilities
Deposits
(122
)
1,431
1,309
2,136
3,624
5,760
Privately placed notes
54
(11
)
43
459
150
609
SBA debentures and borrowings
69
76
145
37
164
201
Trust preferred securities
—
(84
)
(84
)
—
—
—
Total interest-bearing liabilities
$
1
$
1,412
$
1,413
$
2,632
$
3,938
$
6,570
Net
$
2,777
$
172
$
2,949
$
5,589
$
(1,636
)
$
3,953
Nine Months Ended September 30,
2025
2024
(Dollars in thousands)
Increase
(Decrease)
In Volume
Increase
(Decrease)
In Rate
Net Change
Increase
(Decrease)
In Volume
Increase
(Decrease)
In Rate
Net Change
Interest-earning assets
Interest earning cash and cash equivalents
$
11
$
(296
)
$
(285
)
$
356
$
907
$
1,263
Investment securities
143
19
162
89
223
312
Loans
Recreation
11,903
367
12,270
16,698
2,813
19,511
Home improvement
2,995
3,256
6,251
5,323
3,265
8,588
Commercial
957
(610
)
347
1,389
706
2,095
Taxi medallion
(270
)
20
(250
)
(445
)
(501
)
(946
)
Strategic partnerships
1,004
(45
)
959
(5
)
(90
)
(95
)
Total loans
$
16,589
$
2,988
$
19,577
$
22,960
$
6,193
$
29,153
Total interest-earning assets
$
16,743
$
2,711
$
19,454
$
23,405
$
7,323
$
30,728
Interest-bearing liabilities
Deposits
3,026
6,229
9,255
5,731
11,376
17,107
Privately placed notes
396
35
431
1,220
349
1,569
SBA debentures and borrowings
(13
)
95
82
172
326
498
Trust preferred securities
—
(259
)
(259
)
—
108
108
Total interest-bearing liabilities
$
3,409
$
6,100
$
9,509
$
7,123
$
12,159
$
19,282
Net
$
13,334
$
(3,389
)
$
9,945
$
16,282
$
(4,836
)
$
11,446
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44
of 66
During the three and nine months ended September 30, 2025, the increase in interest income over the prior year periods was mainly driven by the increase in the size of the consumer loan portfolios, particularly recreation loans, as well as an increase in overall yield on interest-earning assets as we continued to issue new consumer loans at interest rates greater than the weighted average rates of our current portfolio. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increases in deposits as older deposits mature and are replaced at current market rates, as well as an overall increase in borrowings.
Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, trust preferred securities, and has historically included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are, on average, our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for more flexible interest rate management strategies. In June 2024, we amended our senior notes previously issued in December 2023, increasing the aggregate principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039, and in August 2024, we issued and sold $5.0 million aggregate principal amount of 8.625% senior notes due in August 2039. The net proceeds were used, in large part, to repurchase and settle, in full, $36.0 million aggregate principal amount of our 8.25% senior notes issued in 2019 and which matured in March 2024, as well as for general corporate purposes.
Our cost of funds is primarily driven by the rates paid on our various borrowings and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt. Our debentures issued to the SBA typically have terms of ten years.
We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The above tables present the average borrowings and related borrowing costs for the three and nine months ended September 30, 2025 and 2024. We expect our borrowing costs to further increase as we take deposits and borrow other funds at the currently higher prevailing rates.
We continue to seek SBA funding through Medallion Capital to the extent it offers attractive rates. SBA financing subjects recipients to limits on the amount of secured bank debt they may incur. We use SBA funding to fund loans that qualify under the Small Business Investment Act of 1985, as amended, or the SBIA, and SBA regulations. In February 2024, we obtained an $18.5 million commitment from the SBA, all of which had been utilized as of September 30, 2025.
At September 30, 2025 and 2024, adjustable rate debt constituted less than 2% of total debt and was comprised solely of our trust preferred securities borrowings.
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45
of 66
LOANS
Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three and nine months ended September 30, 2025, there was continued growth in the recreation segment, but a decline in the home improvement lending segment, as compared to the prior year quarter. The following tables present the activity of the loan portfolio, inclusive of loans held for sale and loans held for investment.
Three Months Ended September 30, 2025
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – June 30, 2025
$
1,546,252
$
803,535
$
121,415
$
1,564
$
12,285
$
2,485,051
Loan originations
141,667
59,711
17,500
125
208,352
427,355
Principal receipts, sales, and maturities
(64,097
)
(55,762
)
(3,009
)
(180
)
(205,360
)
(328,408
)
Charge-offs
(16,844
)
(3,840
)
(1,103
)
—
—
(21,787
)
Transfer to loan collateral in process of foreclosure, net
(7,329
)
—
—
—
—
(7,329
)
Amortization of origination fees and costs, net
(3,768
)
1,040
3
—
—
(2,725
)
Origination fees and costs, net
7,288
(681
)
—
—
—
6,607
Paid-in-kind interest
—
—
317
—
—
317
Gross loans – September 30, 2025
$
1,603,169
$
804,003
$
135,123
$
1,509
$
15,277
$
2,559,081
Nine Months Ended September 30, 2025
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – December 31, 2024
$
1,543,243
$
827,211
$
111,273
$
1,909
$
7,386
$
2,491,022
Loan originations
371,289
162,760
36,575
197
513,229
1,084,050
Principal receipts, sales, and maturities
(239,659
)
(173,753
)
(12,320
)
(582
)
(505,338
)
(931,652
)
Charge-offs
(53,391
)
(13,018
)
(1,233
)
(15
)
—
(67,657
)
Transfer to loan collateral in process of foreclosure, net
(22,324
)
—
—
—
—
(22,324
)
Amortization of origination fees and costs, net
(10,995
)
3,329
26
—
—
(7,640
)
Origination fees and costs, net
15,006
(2,526
)
—
—
—
12,480
Paid-in-kind interest
—
—
802
—
—
802
Gross loans – September 30, 2025
$
1,603,169
$
804,003
$
135,123
$
1,509
$
15,277
$
2,559,081
Three Months Ended September 30, 2024
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – June 30, 2024
$
1,497,428
$
773,184
$
110,197
$
3,482
$
1,299
$
2,385,590
Loan originations
139,105
96,545
—
—
39,918
275,568
Principal receipts, sales, and maturities
(61,563
)
(51,409
)
(713
)
(239
)
(38,024
)
(151,948
)
Charge-offs
(16,242
)
(4,258
)
—
—
—
(20,500
)
Transfer to loan collateral in process of foreclosure, net
(6,609
)
—
—
—
—
(6,609
)
Amortization of origination fees and costs, net
(3,549
)
1,206
13
—
—
(2,330
)
Origination fees and costs, net
6,059
(1,197
)
(1
)
—
—
4,861
Paid-in-kind interest
—
—
647
—
—
647
Gross loans – September 30, 2024
$
1,554,629
$
814,071
$
110,143
$
3,243
$
3,193
$
2,485,279
Nine Months Ended September 30, 2024
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Strategic
Partnership
Total
Gross loans – December 31, 2023
$
1,336,226
$
760,617
$
114,827
$
3,663
$
553
$
2,215,886
Loan originations
454,433
216,111
7,000
250
79,952
757,746
Principal receipts, sales, and maturities
(177,152
)
(148,818
)
(13,546
)
(670
)
(77,312
)
(417,498
)
Charge-offs
(48,970
)
(13,219
)
—
—
—
(62,189
)
Transfer to loan collateral in process of foreclosure, net
(17,703
)
—
—
—
—
(17,703
)
Amortization of origination fees and costs, net
(9,715
)
3,057
30
—
—
(6,628
)
Origination fees and costs, net
17,510
(3,677
)
(78
)
—
—
13,755
Paid-in-kind interest
—
—
1,910
—
—
1,910
Gross loans – September 30, 2024
$
1,554,629
$
814,071
$
110,143
$
3,243
$
3,193
$
2,485,279
Page
46
of 66
The following table presents the maturities and sensitivity to change in interest rates for our loans as of September 30, 2025.
Loan Maturity
(Dollars in thousands)
Within 1 year
After 1 to 5 years
After 5 to 15 years
After 15 years
Total
(1)
Fixed-rate
$
33,611
$
248,503
$
1,962,188
$
262,909
$
2,507,211
Recreation
3,743
111,640
1,367,883
64,805
1,548,071
Home improvement
4,357
25,866
578,739
198,104
807,066
Commercial
9,506
110,216
15,566
—
135,288
Strategic partnerships
15,277
—
—
—
15,277
Taxi medallion
728
781
—
—
1,509
Adjustable-rate
$
366
$
20
$
—
$
—
$
386
Recreation
366
20
—
—
386
Home improvement
—
—
—
—
—
Commercial
—
—
—
—
—
Taxi medallion
—
—
—
—
—
Total loans
$
33,977
$
248,523
$
1,962,188
$
262,909
$
2,507,597
(1)
Excludes $51.5 million of capitalized loan origination costs.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of September 30, 2025 and December 31, 2024, the allowance totaled $111.1 million and $97.4 million, which represented 4.47% and 4.12% of total loans held for investment, respectively. The provision for credit losses was $18.6 million for the three months ended September 30, 2025 compared to $20.2 million for the three months ended September 30, 2024 as a result of fewer originations in the current quarter as compared to the prior year quarter. The provision for credit losses was $62.1 million for the nine months ended September 30, 2025 compared to $55.9 million for the nine months ended September 30, 2024 as a result of rising loss rates, fluctuation in delinquencies, and expected losses in our recreation loans, partially offset by a decrease in expected losses in our home improvement loans.
During the three and nine months ended September 30, 2025, we recognized provisions of $1.4 million and $7.4 million related to specific commercial loans. Provisions and the correlated allowance for credit losses of commercial loans are assessed on specific indicators, such as, the underlying borrower not performing as expected and consideration of the current economic environment and economic policies which impact, or are likely to impact, the borrower's underlying business operations.
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2025.
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
(1)
Total
Balance at December 31, 2024
$
71,102
$
20,536
$
5,190
$
540
$
97,368
Charge-offs
(20,274
)
(4,227
)
(130
)
(15
)
(24,646
)
Recoveries
3,860
1,095
—
675
5,630
Provision (benefit) for credit losses
16,870
2,845
3,114
(815
)
22,014
Balance at March 31, 2025
$
71,558
$
20,249
$
8,174
$
385
$
100,366
Charge-offs
(16,273
)
(4,951
)
—
—
(21,224
)
Recoveries
4,419
1,190
10
573
6,192
Provision (benefit) for credit losses
15,336
3,934
2,912
(620
)
21,562
Balance at June 30, 2025
$
75,040
$
20,422
$
11,096
$
338
$
106,896
Charge-offs
(16,844
)
(3,840
)
(1,103
)
—
(21,787
)
Recoveries
3,965
1,758
(10
)
1,675
7,388
Provision (benefit) for credit losses
16,708
2,125
1,414
(1,691
)
18,556
Balance at September 30, 2025
$
78,869
$
20,465
$
11,397
$
322
$
111,053
(1)
As of September 30, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $172.6 million, including $107.5 million related to loans secured by New York City taxi medallions, some of which may represent collection opportunities for the Company.
Page
47
of 66
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2024.
(Dollars in thousands)
Recreation
Home
Improvement
Commercial
Taxi
Medallion
Total
Balance at December 31, 2023
$
57,532
$
21,019
$
4,148
$
1,536
$
84,235
Charge-offs
(18,101
)
(4,898
)
—
—
(22,999
)
Recoveries
3,548
911
20
911
5,390
Provision (benefit) for credit losses
17,030
898
216
(943
)
17,201
Balance at March 31, 2024
$
60,009
$
17,930
$
4,384
$
1,504
$
83,827
Charge-offs
(14,627
)
(4,063
)
—
—
(18,690
)
Recoveries
3,962
1,243
—
869
6,074
Provision (benefit) for credit losses
15,795
3,279
478
(975
)
18,577
Balance at June 30, 2024
$
65,139
$
18,389
$
4,862
$
1,398
$
89,788
Charge-offs
(16,242
)
(4,258
)
—
—
(20,500
)
Recoveries
3,991
745
—
2,343
7,079
Provision (benefit) for credit losses
17,494
4,855
252
(2,450
)
20,151
Balance at September 30, 2024
$
70,382
$
19,731
$
5,114
$
1,291
$
96,518
The following tables present the gross charge-offs for the three and nine months ended September 30, 2025, by the year of origination:
Three Months Ended September 30, 2025
(Dollars in thousands)
2025
2024
2023
2022
2021
Prior
Total
Recreation
$
774
$
3,803
$
4,041
$
4,136
$
1,975
$
2,115
$
16,844
Home improvement
26
957
929
1,109
358
461
3,840
Commercial
—
—
—
—
—
1,103
1,103
Taxi medallion
—
—
—
—
—
—
—
Total
$
800
$
4,760
$
4,970
$
5,245
$
2,333
$
3,679
$
21,787
Nine Months Ended September 30, 2025
(Dollars in thousands)
2025
2024
2023
2022
2021
Prior
Total
Recreation
$
785
$
10,343
$
11,665
$
13,081
$
6,014
$
11,503
$
53,391
Home improvement
26
2,905
4,135
3,303
1,429
1,220
13,018
Commercial
—
—
—
130
—
1,103
1,233
Taxi medallion
—
—
—
—
—
15
15
Total
$
811
$
13,248
$
15,800
$
16,514
$
7,443
$
13,841
$
67,657
The following tables present the gross charge-offs for the three and nine months ended September 30, 2024, by the year of origination:
Three Months Ended September 30, 2024
(Dollars in thousands)
2024
2023
2022
2021
2020
Prior
Total
Recreation
$
921
$
4,717
$
5,167
$
2,354
$
956
$
2,127
$
16,242
Home improvement
148
1,275
1,583
787
209
256
4,258
Commercial
—
—
—
—
—
—
—
Taxi medallion
—
—
—
—
—
—
—
Total
$
1,069
$
5,992
$
6,750
$
3,141
$
1,165
$
2,383
$
20,500
Nine Months Ended September 30, 2024
(Dollars in thousands)
2024
2023
2022
2021
2020
Prior
Total
Recreation
$
1,020
$
12,579
$
17,034
$
7,841
$
3,231
$
7,265
$
48,970
Home improvement
188
4,307
4,857
2,457
615
795
13,219
Commercial
—
—
—
—
—
—
—
Taxi medallion
—
—
—
—
—
—
—
Total
$
1,208
$
16,886
$
21,891
$
10,298
$
3,846
$
8,060
$
62,189
Page
48
of 66
The following tables present the allowance for credit losses by type as of September 30, 2025 and December 31, 2024.
September 30, 2025
(Dollars in thousands)
Amount
Percentage
of Allowance
(1)
Allowance as
a Percent of
Loan Category
(2)
Recreation
$
78,869
71
%
5.10
%
Home improvement
20,465
18
2.55
Commercial
11,397
10
8.43
Taxi medallion
322
*
21.35
Total
(2)
$
111,053
100
%
(1)
Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.
(2)
As of September 30, 2025, total allowance for credit losses as a percent of nonaccrual loans was 297.41%.
(*) Less than 0.1%.
December 31, 2024
(Dollars in thousands)
Amount
Percentage
of Allowance
(1)
Allowance as
a Percent of
Loan Category
(2)
Recreation
$
71,102
73
%
5.00
%
Home improvement
20,536
21
2.48
Commercial
5,190
5
4.66
Taxi medallion
540
1
28.29
Total
(2)
$
97,368
100
%
(1)
Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.
(2)
As of December 31, 2024, total allowance for credit losses as a percent of nonaccrual loans was 291.93%.
As of September 30, 2025, the total allowance for credit losses as a percent of loans increased 35 basis points from December 31, 2024.
The following table presents the trend in loans 90 days or more past due as of the dates indicated.
September 30, 2025
December 31, 2024
(Dollars in thousands)
Amount
%
(1)
Amount
%
(1)
Recreation
$
8,899
0.4
%
$
10,018
0.4
%
Home improvement
1,251
*
1,386
0.1
Commercial
18,924
0.8
16,337
0.7
Total loans 90 days or more past due
$
29,074
1.2
%
$
27,741
1.1
%
(1)
Percentages are calculated against the total loan portfolio.
(*) Less than 0.1%
As of September 30, 2025, taxi medallion loans in the process of foreclosure included 292 taxi medallions in the New York City market, 187 taxi medallions in the Chicago market, 23 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.
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49
of 66
SEGMENT RESULTS
We manage our financial results under four operating segments; recreation lending, home improvement lending, commercial lending, and taxi medallion lending. We also present results for a non-operating segment, corporate and other investments.
Recreation Lending
Recreation lending is a return-oriented business focused on originating prime and non-prime recreation loans which is a significant source of income for us, accounting for 66% of our interest income for each of the three and nine months ended September 30, 2025 and 67% for both the three and nine months ended September 30, 2024.
We maintain relationships with approximately 3,300 dealers and financial service providers, or FSPs, not all of which are active at any one time. FSPs are entities that provide finance and insurance, or F&I, services to small dealers that do not have the desire or ability to provide F&I services themselves. The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable to us. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten dealer and FSP relationships were responsible for 39% of recreation lending’s new loan originations for the nine months ended September 30, 2025 consistent with the nine months ended September 30, 2024. The percentage of new loan originations by the top ten dealer and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.
The recreation loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $21,000 as of September 30, 2025. The loans are fixed rate with an average term at origination of approximately 15 years. The weighted average maturity of our loans outstanding as of September 30, 2025 was approximately 11 years.
The loans are secured primarily by RVs, boats, collector cars, and trailers, with RV loans making up 54% of the portfolio, boat loans making up 21%, and collector car loans making up 12% of the portfolio as of September 30, 2025, compared to 55%, 20%, and 11% as of September 30, 2024. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of September 30, 2025 in Texas and Florida at 16% and 13% of loans outstanding, compared to 16% and 10% at September 30, 2024, and with no other states at or above 10%. As of September 30, 2025 and September 30, 2024, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 685. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2025 and 2024 were 688 and 686.
As of September 30, 2025, the recreation loan portfolio was $1.6 billion, with the average interest rate increasing 25 basis points to 15.17% from a year ago. Additionally, the allowance for credit losses increased 12% from September 30, 2024, reflecting rising loss rates and various economic factors.
During the three and nine months ended September 30, 2025, we originated $141.7 million and $371.3 million in recreation loans, compared to $139.1 million and $454.4 million for the three and nine months ended September 30, 2024. The lower origination volumes during the nine month period reflect our focus on originating loans that we believe will perform better during economic downturns, as well as our efforts to maintain origination volumes that align with our capital levels. The following table presents quarterly originations for 2025, 2024, and 2023.
(Dollars in thousands)
2025
2024
2023
First Quarter
$
86,833
$
105,765
$
101,681
Second Quarter
142,789
209,563
190,007
Third Quarter
141,667
139,105
92,603
Fourth Quarter
—
72,201
62,748
Year Ended
$
371,289
$
526,634
$
447,039
As of September 30, 2025, 36% of the recreation loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the nine months ended September 30, 2025 and years ended December 31, 2024 and 2023.
(Dollars in thousands)
Total
Originations
Non-prime
Originations
Non-prime
Originations (%)
September 30, 2025
$
371,289
$
134,480
36
%
December 31, 2024
526,634
185,334
35
December 31, 2023
447,039
152,045
34
Page
50
of 66
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Selected Earnings Data
Total interest income
$
53,565
$
51,443
$
155,132
$
142,860
Total interest expense
13,487
12,566
38,382
33,171
Net interest income
40,078
38,877
116,750
109,689
Provision for credit losses
16,708
17,494
48,914
50,319
Net interest income after credit loss provision
23,370
21,383
67,836
59,370
Other income
87
200
1,853
756
Operating expenses:
Salaries
(3,475
)
(3,260
)
(10,125
)
(9,623
)
Loan servicing fees and collection costs
(3,516
)
(3,312
)
(10,305
)
(9,395
)
Other costs
(3,103
)
(5,281
)
(9,664
)
(12,358
)
Net income before taxes
13,363
9,730
39,595
28,750
Income tax provision
(4,027
)
(2,810
)
(12,296
)
(9,178
)
Net income after taxes
$
9,336
$
6,920
$
27,299
$
19,572
Balance Sheet Data
Total loans, gross
(1)
$
1,603,169
$
1,554,629
Allowance for credit losses
78,869
70,383
Total loans, net
1,524,300
1,484,246
Total assets
1,546,505
1,505,400
Total segment borrowings
1,258,773
1,253,224
Selected Financial Ratios
Return on average assets
2.44
%
1.81
%
2.42
%
1.87
%
Return on average equity
13.69
13.35
14.21
12.78
Interest yield
13.45
13.34
13.37
13.32
Net interest margin, gross
10.06
10.08
10.06
10.23
Net interest margin, net of allowance
10.58
10.55
10.56
10.65
Reserve coverage
(2)
5.10
4.53
5.10
4.53
Delinquency status
(3)
0.57
0.50
0.57
0.50
Charge-off ratio
(4)
3.36
3.18
3.74
3.48
(1)
Inclusive of both loans held for investment and loans held for sale.
(2)
Allowance for credit loss as a percent of gross loans held for investment and excludes loans held for sale.
(3)
Loans 90 days or more past due as a percent of total loans.
(4)
The charge-off ratio in the recreation lending segment was 3.23% and 3.58% for the three and nine months ended September 30, 2025 when including loans held for sale.
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51
of 66
Home Improvement Lending
The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in swimming pools, roofs, and windows at 31%, 29%, and 11% of total home improvement loans outstanding as of September 30, 2025, as compared to 38%, 24%, and 13% as of September 30, 2024, with no other collateral types at or above 10%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas representing 13% and 12% of loans outstanding as of September 30, 2025, with each state representing 11% as of September 30, 2024 and no other states at or above 10%. As of September 30, 2025 and 2024, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 767 and 766. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2025 and 2024 were 779 and 781.
A large proportion of our home improvement-financed sales are facilitated by contractor salespeople with limited financing backgrounds rather than by contractor employees who provide F&I services. The result is contractor demand for financing services that facilitate an in-home transaction (e.g., digital tools, including mobile applications for phone or tablet, support for E-SIGN compliant electronic signatures, and extended operating hours), and additional resources for the salesperson throughout the financing process. We currently maintain relationships with approximately 700 contractors and FSPs. Our top ten contractors and FSP relationships were responsible for 62% of home improvement lending’s new loan originations for the nine months ended September 30, 2025. The percentage of new loan originations by the top ten contractor and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.
The home improvement loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of September 30, 2025. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 15 years. The weighted average maturity of our loans outstanding as of September 30, 2025 was approximately 13 years.
As of September 30, 2025, the home improvement portfolio totaled $804.0 million, with allowance for credit losses increasing 4% from a year ago reflecting higher delinquency and potential losses. The average interest rate charged on our loans increased 11 basis points to 9.87% at September 30, 2025 from a year ago.
During the three and nine months ended September 30, 2025, we originated $59.7 million and $162.8 million of home improvement loans, compared to $96.5 million and $216.1 million for the three and nine months ended September 30, 2024. The lower origination volumes reflect our focus on originating loans that we believe will perform better during economic downturns, as well as our efforts to maintain origination volumes that align with our capital levels. The following table presents quarterly originations for 2025, 2024, and 2023.
(Dollars in thousands)
2025
2024
2023
First Quarter
$
48,796
$
51,576
$
94,981
Second Quarter
54,253
67,990
117,035
Third Quarter
59,711
96,545
79,333
Fourth Quarter
—
82,531
66,045
Year Ended
$
162,760
$
298,642
$
357,394
As of September 30, 2025, less than 1% of the home improvement loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the nine months ended September 30, 2025 and years ended December 31, 2024 and 2023.
(Dollars in thousands)
Total
Originations
Non-prime
Originations
Non-prime
Originations (%)
September 30, 2025
$
162,760
$
65
*
December 31, 2024
298,642
586
*
December 31, 2023
357,394
3,094
*
(*) Less than 1%.
Page
52
of 66
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Selected Earnings Data
Total interest income
$
20,453
$
19,008
$
60,357
$
54,106
Total interest expense
7,344
7,033
21,633
18,773
Net interest income
13,109
11,975
38,724
35,333
Provision for credit losses
2,125
4,855
8,904
9,032
Net interest income after credit loss provision
10,984
7,120
29,820
26,301
Other income
2
2
7
7
Operating expenses:
Salaries
(2,170
)
(2,018
)
(6,523
)
(6,099
)
Loan servicing fees and collection costs
(941
)
(899
)
(2,874
)
(2,657
)
Other costs
(1,480
)
(2,829
)
(4,888
)
(6,561
)
Net income before taxes
6,395
1,376
15,542
10,991
Income tax provision
(1,943
)
(290
)
(4,827
)
(3,509
)
Net income after taxes
$
4,452
$
1,086
$
10,715
$
7,482
Balance Sheet Data
Total loans, gross
$
804,003
$
814,071
Allowance for credit losses
20,465
19,731
Total loans, net
783,538
794,340
Total assets
788,764
798,261
Total segment borrowings
642,012
664,541
Selected Financial Ratios
Return on average assets
2.24
%
0.55
%
1.80
%
1.31
%
Return on average equity
12.59
3.86
10.57
8.69
Interest yield
10.11
9.51
9.95
9.38
Net interest margin, gross
6.48
5.99
6.38
6.12
Net interest margin, net of allowance
6.65
6.14
6.55
6.26
Reserve coverage
(1)
2.55
2.42
2.55
2.42
Delinquency status
(2)
0.16
0.19
0.16
0.19
Charge-off ratio
(3)
1.03
1.76
1.48
1.78
(1)
Allowance for credit losses as a percent of gross loans.
(2)
Loans 90 days or more past due as a percent of total loans.
(3)
Net charge-offs as a percent of annual average gross loans.
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53
of 66
Commercial Lending
We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California and New York having 25% and 10% of the segment portfolio, and no other states having a concentration at or above 10%. These mezzanine loans are primarily secured by a second position on all assets of the businesses and generally range in amount from $2.5 million to $6.0 million at origination, and typically include an equity component as part of the financing. These equity components, although a small portion of the overall financing, have the potential to generate significant yield enhancement when the underlying portfolio company enters a capital transaction. During the three and nine months ended September 30, 2025, net gains of $0.3 million and $15.8 million were recognized with respect to these equity investments. The commercial lending business has concentrations in manufacturing, construction, and wholesale trade making up 56%, 16%, and 10%, of the loans outstanding as of September 30, 2025. During the nine months ended September 30, 2025, we originated $36.6 million of new commercial loans.
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2025 and 2024. The commercial segment encompasses the mezzanine lending business, and the other legacy commercial loans (immaterial to total) have been allocated to corporate and other investments.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Selected Earnings Data
Total interest income
$
4,227
$
3,761
$
11,325
$
10,944
Total interest expense
1,252
1,063
3,462
3,217
Net interest income
2,975
2,698
7,863
7,727
Provision for credit losses
1,414
252
7,440
946
Net interest income after credit loss provision
1,561
2,446
423
6,781
Other income:
Gains on equity investments, net
257
(519
)
15,783
3,136
Other income
3
105
477
638
Operating expenses:
Salaries
(1,133
)
(883
)
(3,349
)
(2,620
)
Other costs
(357
)
(352
)
(1,023
)
(1,037
)
Net income before taxes
331
797
12,311
6,898
Income tax provision
(50
)
(159
)
(3,823
)
(2,202
)
Net income after taxes
$
281
$
638
$
8,488
$
4,696
Balance Sheet Data
Total loans, gross
$
135,123
$
110,143
Allowance for credit losses
11,397
5,114
Total loans, net
123,726
105,029
Total assets
125,349
105,232
Total segment borrowings
102,027
87,604
Selected Financial Ratios
Return on average assets
0.89
%
2.41
%
9.73
%
5.92
%
Return on average equity
5.19
16.38
58.17
38.63
Interest yield
13.24
13.57
12.48
13.20
Net interest margin, gross
9.05
9.74
8.69
9.32
Net interest margin, net of allowance
9.84
10.19
9.33
9.69
Reserve coverage
(1)
8.43
4.64
8.43
4.64
Delinquency status
(2)
13.99
7.39
13.99
7.39
Charge-off (recovery) ratio
(3)
3.38
—
1.36
(0.02
)
(1)
Allowance for credit losses as a percent of gross loans.
(2)
Loans 90 days or more past due as a percent of total loans.
(3)
Net charge-offs as a percent of annual average gross loans.
As of September 30,
2025
2024
Geographic Concentrations
(Dollars in thousands)
Total Gross
Loans
% of
Market
Total Gross
Loans
% of
Market
California
$
33,350
25
%
$
33,183
30
%
New York
13,552
10
2,271
2
Texas
12,187
9
10,806
10
Wisconsin
10,723
8
11,646
11
Other
65,311
48
52,237
47
Total
$
135,123
100
%
$
110,143
100
%
Page
54
of 66
Taxi Medallion Lending
The taxi medallion lending segment operates in the New York City metropolitan area. During the three and nine months ended September 30, 2025, we continued to utilize a taxi medallion value of $79,500 in the New York City and Newark markets despite fluctuating transfer prices that have exceeded that value, with all other markets being valued at $0 at the end of the quarter. We continued to not recognize interest income with all loans being placed on nonaccrual (except for settled loans with interest being paid in excess of the loan balance), and by transferring underperforming loans from the portfolio to loan collateral in process of foreclosure with charge-offs to collateral value, once loans become more than 120 days past due.
During the three and nine months ended September 30, 2025, we collected $6.1 million and $11.1 million related to taxi medallion and related assets, which resulted in net recoveries and gains of $3.4 million and $6.5 million. The amount of cash collected as well as recoveries recorded vary greatly from period to period due to a wide variety of circumstances surrounding each of the underlying assets, and while we continue to focus on collection and recovery efforts, it is unlikely that there will be future collections at the higher levels experienced in prior years.
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Selected Earnings Data
Total interest income
$
91
$
184
$
243
$
514
Total interest expense
16
30
66
83
Net interest income
75
154
177
431
Benefit for credit losses
(1,691
)
(2,450
)
(3,126
)
(4,368
)
Net interest income after credit loss benefit
1,766
2,604
3,303
4,799
Other income
1,781
321
3,373
1,294
Operating expenses:
Salaries
(509
)
(747
)
(1,742
)
(2,186
)
Loan servicing fees and collection costs
(36
)
(239
)
(287
)
(645
)
Other costs
(275
)
(458
)
(614
)
(729
)
Net income before taxes
2,727
1,481
4,033
2,533
Income tax provision
(838
)
(457
)
(1,253
)
(809
)
Net income after taxes
$
1,889
$
1,024
$
2,780
$
1,724
Balance Sheet Data
Total loans, gross
$
1,509
$
3,243
Allowance for credit losses
322
1,290
Total loans, net
1,187
1,953
Total assets
5,204
6,208
Total segment borrowings
4,236
5,168
Selected Financial Ratios
Return on average assets
133.67
%
50.54
%
60.34
%
26.64
%
Return on average equity
748.44
302.61
355.24
155.33
Interest yield
22.66
21.96
19.60
20.59
Net interest margin, gross
18.68
18.38
14.46
16.65
Net interest margin, net of allowance
23.84
30.60
18.90
27.99
Reserve coverage
(1)
21.35
39.78
21.35
39.78
Recovery ratio
(2)
(417.16
)
(279.58
)
(237.51
)
(159.26
)
(1)
Allowance for credit losses as a percent of gross loans.
(2)
Net recoveries as a percent of annual average gross loans.
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55
of 66
Corporate and Other Investments
This non-operating segment relates to our equity and investment securities as well as our legacy commercial business, and other assets, liabilities, revenues, and expenses, which are not specifically allocated to the operating segments. Additionally, we historically have and continue to account for goodwill in this non-operating segment. All goodwill relates to the Bank, specifically the recreation and home improvement lending segments.
This segment includes loans related to our strategic partnership program, which are issued by the Bank. The associated activities of the strategic partnership program are currently limited to originating loans or other receivables facilitated by our strategic partners and selling those loans or receivables to our strategic partners or other third parties, without recourse, within a specified time after origination, such as three business days. Strategic partnership loans were $15.3 million as of September 30, 2025 and $3.2 million as of September 30, 2024, with originations of $208.4 million and $513.2 million during the three and nine months ended September 30, 2025 and $39.9 million and $80.0 million during the three and nine months ended September 30, 2024.
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Selected Earnings Data
Total interest income
$
2,435
$
2,013
$
6,580
$
5,759
Total interest expense
2,986
2,980
9,627
8,417
Net interest expense
(551
)
(967
)
(3,047
)
(2,658
)
Strategic partnership fee income
990
400
2,461
1,206
Other (loss) income
(72
)
78
(96
)
52
Operating expenses:
Salaries
(2,858
)
(2,548
)
(8,547
)
(7,819
)
Loan servicing fees and collection costs
(19
)
(13
)
(49
)
(53
)
Other costs
(830
)
3,844
(3,016
)
4,567
Net (loss) income before taxes
(3,340
)
794
(12,294
)
(4,705
)
Income tax benefit (provision)
996
(339
)
3,819
1,502
Net (loss) income after taxes
$
(2,344
)
$
455
$
(8,475
)
$
(3,203
)
Balance Sheet Data
Total loans
$
15,277
$
3,193
Total assets
434,565
464,951
Total segment borrowings
353,713
387,066
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56
of 66
SUMMARY CONSOLIDATED FINANCIAL DATA
The table below presents our selected financial data for the three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2025
2024
2025
2024
Return on average assets
1.88
%
1.43
%
1.91
%
1.51
%
Return on average equity
10.73
%
9.46
%
11.41
%
9.62
%
Return on average stockholders' equity
7.85
%
9.61
%
10.71
%
9.79
%
Net interest margin, gross
8.21
%
8.11
%
8.07
%
8.11
%
Equity to assets
(1)
17.13
%
14.97
%
17.13
%
14.97
%
Debt to equity
(1) (2)
4.8x
5.5x
4.8x
5.5x
Net loans receivable to assets
(3)
84
%
83
%
84
%
83
%
Net charge-offs
$
14,399
$
13,421
$
48,447
$
43,646
Net charge-offs as a % of average loans receivable
(4)
2.26
%
2.18
%
2.60
%
2.51
%
Reserve coverage ratio
(5)
4.47
%
3.88
%
4.47
%
3.88
%
(1)
Includes $99.4 million and $68.8 million related to non-controlling interests in consolidated subsidiaries as of September 30, 2025 and 2024.
(2)
Excludes deferred financing costs of $9.0 million as of both September 30, 2025 and 2024.
(3)
Includes both loans held for investment and loans held for sale.
(4)
Net charge-offs as a percent of annual average gross loans.
(5)
Allowance for credit losses as a percent of loans held for investment. Loans held for sale are carried at the lesser of amortized cost or fair value, do not have an allowance for credit losses, and are excluded from this calculation.
CONSOLIDATED RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 2025 Compared to the Three and Nine Months Ended September 30, 2024
Net income attributable to shareholders was $7.8 million and $30.8 million, or $0.32 and $1.28 per diluted share, for the three and nine months ended September 30, 2025, compared to $8.6 million and $25.7 million, or $0.37 and $1.09 per diluted share, for the three and nine months ended September 30, 2024.
Total interest income was $80.8 million and $233.6 million for the three and nine months ended September 30, 2025, compared to $76.4 million and $214.2 million for the three and nine months ended September 30, 2024. The increase in interest income reflects the continued growth in our lending segments, particularly recreation lending, as well as an increased weighted average interest rates charged on loans. The yield on interest earning assets was 11.92% and 11.75% for the three and nine months ended September 30, 2025, compared to 11.75% and 11.54% for the three and nine months ended September 30, 2024. The increase reflects higher interest rates on new originations in our recreation and home improvement lending segments, with the yield anticipated to continue to increase as older loans, written at lower rates, amortize and newer originations at the higher current rates continue to become a larger portion of our portfolio. We expect this increased yield to be partially offset by lower originations due to the economic environment and our risk mitigation strategy, as further described below.
Loans, inclusive of both loans held for investment and those held for sale, were $2.559 billion as of September 30, 2025, comprised of recreation ($1.603 billion), home improvement ($804.0 million), commercial ($135.1 million), strategic partnership ($15.3 million), and taxi medallion ($1.5 million) loans. We had an allowance for credit losses as of September 30, 2025 of $111.1 million, which was attributable to recreation (71%), home improvement (18%), commercial (10%), and taxi medallion (less than 1%) loans.
Loans increased $74.0 million, or less than 3% for the quarter from June 30, 2025 and $68.1 million, or less than 3%, from December 31, 2024. Originations for the three and nine months ended September 30, 2025 were $427.4 million and $1,084.1 million compared to $275.6 and $757.8 million for the three and nine months ended September 30, 2024. Originations for the three and nine months ended September 30, 2025 included $208.4 million and $513.2 million of strategic partnership program loans. Comparatively, originations for the three and nine months ended September 30, 2024 included $39.9 million and $80.0 million in strategic partnership loans. Originations decreased in both of our consumer segments during the nine months ended September 30, 2025 as we continued to focus on originating loans that we believe will perform better during economic downturns, as well as adjusting origination volumes to align with our capital requirements.
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57
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The provision for credit losses were $18.6 million and $62.1 million for the three and nine months ended September 30, 2025, compared to $20.2 million and $55.9 million for the three and nine months ended September 30, 2024 and included net loan benefits in the taxi medallion lending segment of $1.7 million and $3.1 million in the three and nine months ended September 30, 2025, as compared to $2.5 million and $4.4 million for the 2024 periods. Credit loss provisions were $16.7 million for recreation loans, $2.1 million for home improvement loans and $1.4 million for commercial loans during the quarter and were $48.9 million, $8.9 million and $7.4 million for the year to date period. Gross charge-offs for the quarter were $16.8 million, $3.8 million and $1.1 million in the recreation, home improvement and commercial segments and were $53.4 million, $13.0 million and $1.2 million for the year to date period. Charge-offs in both the recreation and home improvement lending segments correlate with delinquency status, which improved from December 31, 2024, consistent with seasonal trends. Compared to a year ago, home improvement loan delinquencies improved, with total delinquencies decreasing from 1.02% to 0.92%, while recreation loans continued to be somewhat elevated, with total delinquencies being 4.79% compared to 4.30% a year ago. For both of these segments, delinquencies is one of the factors which drives our allowance for credit loss, which was 5.10% and 2.55% at September 30, 2025 for recreation and home improvement loans, as compared to 4.53% and 2.42% at September 30, 2024. Provisions and the correlated allowance for credit losses of commercial loans are assessed on specific indicators, such as, the underlying borrower not performing as expected and consideration for the current economic environment and economic policies which impact, or are likely to impact, the borrower's underlying business operations.
Interest expense was $25.1 million and $73.2 million for the three and nine months ended September 30, 2025, compared to $23.7 million and $63.7 million for the three and nine months ended September 30, 2024, reflecting both higher average borrowings and higher average borrowing costs during the three and nine months ended September 30, 2025, with borrowing costs expected to remain elevated in the current interest rate environment. The average cost of borrowed funds was 4.28% and 4.22% for the three and nine months ended September 30, 2025, compared to 4.05% and 3.86% for the three and nine months ended September 30, 2024. The increases of 23 and 36 basis points over the prior year periods are largely attributable to the increased cost of newly issued certificates of deposit used both to fund our growth and to replace older maturing loans with lower rates. As we replace upcoming deposit maturities with new issues, we expect our cost of funds to further increase. During the three months ended September 30, 2025, we issued certificates of deposit at rates up to 3.98% and 4.03% for three and five year certificates of deposit, with the most recent issuances during the quarters being at rates of 3.73% and 3.78%. In addition, we expect our interest expense related to SBA borrowings to increase as newly issued SBA debentures carry a higher rate compared to some of our previously issued debentures. Average debt outstanding was $2.324 billion for the three months ended September 30, 2025 which is comparable to $2.328 billion for the three months ended September 30, 2024. Average debt outstanding for the nine months ended September 30, 2025 was $2.317 billion, compared to $2.206 billion for nine months ended September 30, 2024, as we increased our borrowings, particularly certificates of deposit to fund our loan growth. See page
42
for tables that present average balances and cost of funds for our funding sources.
Net interest income was $55.7 million and $160.5 million for the three and nine months ended September 30, 2025, compared to $52.7 million and $150.5 million for the three and nine months ended September 30, 2024. The net interest margin before the impact of the allowance for credit losses was 8.21% and 8.07% for the three and nine months ended September 30, 2025, compared to 8.11% for both the three and nine months ended September 30, 2024, reflecting the above, particularly the rising cost of borrowings experienced over the prior year quarter, partially offset by higher yields on loans and investments compared to the prior year quarter. With the rates we charge on outstanding loans being fixed, and our cost of funds increasing, our net interest margin has tightened over the prior periods as we can only increase our yield through higher rates charged on new originations. Recently we have begun to see our margin stabilize, with expansion in the three months ended September 30, 2025. We expect this trend to continue to some degree as our cost of funds, particularly on deposits, continues to stabilize, with the current average rate on deposits of 3.82% being in line with new issuance costs during the quarter.
Net other income, which is comprised primarily of gains on equity investments, gains related to and in connection with the disposition of taxi medallion assets, and fees associated with our strategic partnership program, as well as prepayment fees, servicing fee income, and late charges was $3.0 million and $23.9 million for the three and nine months ended September 30, 2025, compared to $0.6 million and $7.1 million for the three and nine months ended September 30, 2024. Net equity gains were $0.3 million and $15.8 million for the three and nine months ended September 30, 2025 compared to a net loss of $0.6 million and net gains of $3.1 million for the three and nine months ended September 30, 2024. Net other income includes $1.8 million and $3.4 million of gains on the disposition of taxi medallion assets, $1.0 million and $2.5 million of strategic partnership fees earned for the three and nine months ended September 30, 2025. Additionally, net other income includes $1.3 million of gains in the nine months ended September 30, 2025 related to a sale of recreation loans.
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58
of 66
Operating expenses were $20.7 million and $63.0 million for the three and nine months ended September 30, 2025, compared to $19.0 million and $57.2 million for the three and nine months ended September 30, 2024. Salaries and benefits were $10.1 million and $30.3 million for the three and nine months ended September 30, 2025, compared to $9.5 million and $28.3 million for the three and nine months ended September 30, 2024, primarily reflecting greater head count at our operating subsidiaries, Medallion Bank and Medallion Capital, and higher incentive compensation at certain segments due to higher performance. Additionally, other expenses were higher, particularly depreciation and technology-related expenses associated with our loan servicing platform.
ASSET/LIABILITY MANAGEMENT
Interest Rate Sensitivity
We, like other financial institutions, are subject to interest rate risk to the extent that our interest-earning assets (consisting of consumer, commercial, and taxi medallion loans, and investment securities) reprice on a different basis over time in comparison to our interest-bearing liabilities (consisting primarily of bank certificates of deposit, SBA debentures and borrowings, historically credit facilities, and borrowings from banks and other lenders).
Having interest-bearing liabilities that mature or reprice more frequently on average than assets may be beneficial in times of declining interest rates, although such an asset/liability structure may result in declining net earnings during periods of rising interest rates. Abrupt increases in market rates of interest may have an adverse impact on our earnings until we are able to originate new loans at the higher prevailing interest rates. Conversely, having interest-earning assets that mature or reprice more frequently on average than liabilities may be beneficial in times of rising interest rates, although this asset/liability structure may result in declining net earnings during periods of falling interest rates. This mismatch between maturities and interest rate sensitivities of our interest-earning assets and interest-bearing liabilities results in interest rate risk.
The effect of changes in interest rates is mitigated by regular turnover of the portfolios. We believe that the average life of our loan portfolios varies to some extent as a function of changes in interest rates. Borrowers are more likely to exercise prepayment rights in a decreasing interest rate environment because the interest rate payable on the borrower’s loan is high relative to prevailing interest rates. Conversely, borrowers are less likely to prepay in a rising interest rate environment. However, borrowers may prepay for a variety of other reasons, such as to monetize increases in the underlying collateral values. In addition, we manage our exposure to increases in market rates of interest by incurring fixed-rate indebtedness, such as ten year subordinated SBA debentures, and by setting repricing intervals on certificates of deposit, for terms of up to five years.
A relative measure of interest rate risk can be derived from our interest rate sensitivity gap. The interest rate sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities, which mature and/or reprice within specified intervals of time. The gap is considered to be positive when repriceable assets exceed repriceable liabilities, and negative when repriceable liabilities exceed repriceable assets. A relative measure of interest rate sensitivity is provided by the cumulative difference between interest sensitive assets and interest sensitive liabilities for a given time interval expressed as a percent of total assets.
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59
of 66
The following table presents our interest rate sensitivity gap at September 30, 2025. The principal amounts of interest earning assets are assigned to the time frames in which such principal amounts are contractually obligated to be repriced. We do not reflect any prepayment assumptions in preparing the analysis, despite historical average life experience being significantly shorter than contractual terms.
September 30, 2025 Cumulative Gap
(1)
(Dollars in thousands)
Less
Than
1 Year
More
Than
1 and Less
Than 2
Years
More
Than 2
and Less
Than 3
Years
More
Than 3
and Less
Than 4
Years
More
Than 4
and Less
Than 5
Years
More
Than
5 and Less
Than 6
Years
Thereafter
Total
Earning assets
Fixed-rate
$
33,611
$
27,362
$
67,870
$
58,808
$
94,463
$
80,265
$
2,144,832
$
2,507,211
Adjustable rate
366
4
10
—
6
—
—
386
Investment securities and equity investments
4,956
648
3,170
9,128
3,058
9,016
40,410
70,386
Cash and cash equivalents
150,978
—
—
—
—
—
—
150,978
Total earning assets
$
189,911
$
28,014
$
71,050
$
67,936
$
97,527
$
89,281
$
2,185,242
$
2,728,961
Interest bearing liabilities
Deposits
$
604,598
$
601,480
$
417,372
$
190,567
$
241,994
$
—
$
—
$
2,056,011
Privately placed notes
31,250
—
92,750
—
—
—
22,500
146,500
SBA debentures and borrowings
14,000
2,000
1,250
1,250
3,000
—
63,500
85,000
Trust preferred securities
—
—
—
—
—
—
33,000
33,000
Federal reserve and other borrowings
35,000
—
—
—
—
—
—
35,000
Total liabilities
$
684,848
$
603,480
$
511,372
$
191,817
$
244,994
$
—
$
119,000
$
2,355,511
Interest rate gap
$
(494,937
)
$
(1,070,403
)
$
(1,510,725
)
$
(1,634,606
)
$
(1,782,073
)
$
(1,692,792
)
$
373,450
$
—
Cumulative interest rate gap
$
(494,937
)
$
(1,070,403
)
$
(1,510,725
)
$
(1,634,606
)
$
(1,782,073
)
$
(1,692,792
)
$
373,450
$
—
December 31, 2024
(2)
$
(584,817
)
$
(456,813
)
$
(426,717
)
$
(114,216
)
$
(80,863
)
$
70,765
$
1,930,856
$
—
December 31, 2023
(2)
$
(498,772
)
$
(1,015,143
)
$
(1,335,301
)
$
(1,474,758
)
$
(1,578,162
)
$
(1,494,411
)
$
281,971
$
—
(1)
The ratio of the cumulative one-year gap to total interest rate sensitive assets was (18%) as of September 30, 2025, and was (18%) as of December 31, 2024.
(2)
Excludes federal funds sold and investment securities.
Our interest rate sensitive assets were $2.7 billion and interest rate sensitive liabilities were $2.4 billion at September 30, 2025. The one-year cumulative interest rate gap was a negative $494.9 million, or 18% of interest rate sensitive assets. We actively monitor the level of exposure with the goal that movements in interest rates not adversely and unexpectedly negatively affect future earnings. We use net interest income sensitivity analysis as our primary metric to measure and manage the interest rate sensitivities of our loan and investment securities portfolios.
Our trust preferred securities bear a variable rate of interest of the 90-day Secured Overnight Financing Rate, or SOFR, adjusted by a relevant spread adjustment of approximately 26 basis points. As of September 30, 2025, these borrowings had a cost of 6.52%, a reduction of 86 basis points from a year ago.
Liquidity and Capital Resources
Our sources of liquidity include brokered certificates of deposit and other borrowings at the Bank, unfunded commitments to sell debentures to the SBA, loan amortization and prepayments, private and public issuances of debt securities, participations or sales of loans to third parties, issuances of preferred securities at our subsidiaries, and the disposition of our other assets.
In May 2025, the Bank closed an initial public offering of 3,100,000 shares of its Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series G, with a $77.5 million aggregate liquidation amount, or $25 per share, yielding net proceeds of $73.1 million. Dividends are payable quarterly from the date of issuance to, but excluding July 1, 2030, at a fixed rate equal to 9.00% per annum, and from and including July 1, 2030, during each reset period at a rate equal to the five-year U.S. Treasury rate plus a spread of 4.94% per annum.
In August 2024, we completed a private placement to certain institutional investors of $5.0 million aggregate principal amount of 8.625% unsecured senior notes due August 2039, with interest payable semiannually. We used the net proceeds from the offering for general corporate purposes.
In June 2024, we amended the notes previously issued in a private placement to certain institutional investors in December 2023, increasing the principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039. We used the net proceeds from the offering for general corporate purposes, which included the repayment of the remaining 8.25% notes that matured in March 2024 described below.
Over the years, the SBA has approved commitments for Medallion Capital, typically for a four and a half year term and a 1% fee. On February 28, 2024, Medallion Capital accepted a commitment from the SBA for $18.5 million in debenture financing, all of which had been utilized as of September 30, 2025.
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60
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In September 2023, we completed a private placement to certain institutional investors of $39.0 million aggregate principal amount of 9.25% unsecured senior notes due September 2028, with interest payable semiannually.
In April 2023, the Bank began to originate retail savings deposits through a third-party service provider and, as of September 30, 2025, the Bank had $4.6 million in retail savings deposit balances.
In March 2023, the Bank established a discount window line of credit at the Federal Reserve. As of September 30, 2025, the Bank had $189.6 million in home improvement loans pledged as collateral to the Federal Reserve. The current advance rate on the pledged securities is approximately 45% of book value, for a total of approximately $85.7 million in secured borrowing capacity, of which none was utilized as of September 30, 2025.
The Bank has borrowing arrangements with several correspondent banks. These agreements are accommodations that can be terminated at any time, for any reason, and allow the Bank to borrow up to $75.0 million. As of September 30, 2025, there was $35.0 million outstanding with respect to these arrangements.
The net proceeds from the various private placements were used for general corporate purposes, including repayment of outstanding debt, including some borrowings at a discount, and to repurchase, repay, and cancel $36.0 million of our 8.25% notes, which matured in March 2024.
Subject to market conditions, the Bank may seek to issue one or more additional series of preferred stock in order to increase capital levels, grow the consumer loan portfolios or, depending on the size and other terms of any such issuance and subject to receipt of any required regulatory approvals, redeem some or all of its outstanding preferred stock. Any determination to seek to redeem some or all of the Bank’s outstanding preferred stock would be based on its actual and anticipated capital levels and capital deployment opportunities. There can be no assurance that the Bank will issue additional series of preferred stock or, if it does, that it will apply the proceeds to redeem any series of preferred stock. On July 1, 2025, the Bank redeemed its Series F Preferred Stock, in its entirety, for an aggregate amount of $46.0 million, which resulted in a $3.5 million charge to earnings attributable to common shareholders upon the redemption.
The table below presents the components of our debt as of September 30, 2025, exclusive of deferred financing costs of $9.0 million. See Note 5 to the consolidated financial statements for details of the contractual terms of our borrowings.
(Dollars in thousands)
Balance
Percentage
(1)
Rate
(2)
Deposits
(3)
$
2,056,011
87
%
3.82
%
Privately placed notes
146,500
6
8.12
SBA debentures and borrowings
85,000
4
3.98
Trust preferred securities
33,000
1
6.52
Federal reserve and other borrowings
35,000
1
4.55
Total outstanding debt
$
2,355,511
100
%
4.14
%
(1)
Percentages may not foot due to rounding.
(2)
Weighted average contractual rate as of September 30, 2025.
(3)
Balance excludes $5.3 million of strategic partner reserve deposits as of September 30, 2025.
Our contractual obligations expire on or mature at various dates through September 2037. The following table presents our contractual obligations at September 30, 2025.
Payments due by period
(Dollars in thousands)
Less than
1 year
1 – 2
years
2 – 3
years
3 – 4
years
4 – 5
years
More than
5 years
Total
(1)
Borrowings
Deposits
(2)
$
604,598
$
601,480
$
417,372
$
190,567
$
241,994
$
—
$
2,056,011
Privately placed notes
31,250
—
92,750
—
—
22,500
146,500
SBA debentures and borrowings
14,000
2,000
1,250
1,250
3,000
63,500
85,000
Trust preferred securities
—
—
—
—
—
33,000
33,000
Federal reserve and other borrowings
35,000
—
—
—
—
—
35,000
Total outstanding borrowings
684,848
603,480
511,372
191,817
244,994
119,000
2,355,511
Operating lease obligations
2,561
1,827
588
586
602
96
6,260
Total contractual obligations
$
687,409
$
605,307
$
511,960
$
192,403
$
245,596
$
119,096
$
2,361,771
(1)
Total debt is exclusive of deferred financing costs of $9.0 million as of September 30, 2025.
(2)
Balance excludes $5.3 million of strategic partner reserve deposits as of September 30, 2025.
Approximately $1.3 billion of our borrowings have maturity dates during the next two years, a majority of which are brokered certificates of deposit that have no right of voluntary withdrawal. We are seeking to refinance the $31.25 million of privately placed notes that mature in February 2026.
In addition, the illiquidity of portions of our loan portfolio and investments may adversely affect our ability to dispose of them at times when it may be advantageous for us to liquidate such portfolio or investments. In addition, if we were required to liquidate some or all of our portfolio, the proceeds of such liquidation may be significantly less than the current value of such investments. Because we
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borrow money to make loans and investments, our net operating income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our interest income. In periods of sharply rising interest rates, our cost of funds would increase, which would reduce our net interest income.
We use a combination of long-term and short-term borrowings and equity capital to finance our lending and investing activities. Our long-term fixed-rate investments are financed primarily with fixed-rate debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. We have analyzed the potential impact of changes in interest rates on net interest income. Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of September 30, 2025 by $1.7 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $0.9 million at September 30, 2025. Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size, and composition of the assets on the balance sheet, and other business developments that could affect net income from operations in a particular quarter or for the year taken as a whole. Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.
From time to time, we work with investment banking firms and other financial intermediaries to investigate the viability of several other financing options which include, among others, the sale or spinoff of certain assets or divisions, the development of a securitization conduit program, and other independent financing for certain subsidiaries or asset classes. These financing options would also provide additional sources of funds for both external expansion and continuation of internal growth.
The following table illustrates sources of available funds for us and each of our subsidiaries, and amounts outstanding under trust preferred securities and borrowings and their respective end of period weighted average interest rates at September 30, 2025. See Note 5 to the consolidated financial statements for additional information about each borrowing.
(Dollars in thousands)
Medallion
Financial Corp.
Medallion
Funding LLC
Medallion
Capital, Inc.
Freshstart Venture Capital Corp.
Medallion
Bank
September 30,
2025
December 31,
2024
Cash, cash equivalents and federal funds sold
$
20,129
$
305
$
14,954
(1)
$
3,488
$
112,102
$
150,978
$
169,572
Trust preferred securities
33,000
33,000
33,000
Average interest rate
6.52
%
6.52
%
6.83
%
Maturity
9/37
9/37
9/37
Privately placed notes
146,500
146,500
146,500
Average interest rate
8.12
%
8.12
%
8.12
%
Maturity
2/26 - 8/39
2/26 - 8/39
2/26 - 8/39
SBA debentures & borrowings
Amounts available
—
—
28,750
Amounts outstanding
85,000
85,000
70,250
Average interest rate
3.98
%
3.98
%
3.53
%
Maturity
3/26 - 9/35
9/25 - 9/35
3/25- 3/34
Brokered certificates of deposit
2,061,261
(2)
2,061,261
2,094,663
Average interest rate
3.82
%
3.82
%
3.71
%
Maturity
10/25 - 9/30
10/25 - 9/30
1/25 - 12/29
Federal reserve and other borrowings
35,000
35,000
35,000
Average interest rate
4.55
%
4.55
%
4.55
%
Maturity
N/A
N/A
N/A
Total cash
$
20,129
$
305
$
14,954
$
3,488
$
112,102
$
150,978
$
169,572
Total debt outstanding
$
179,500
$
—
$
85,000
$
—
$
2,096,261
$
2,360,761
$
2,379,413
(1)
Cash resides in the applicable SBIC and is generally not available for corporate use.
(2)
Includes deposits of $5.3 million related to the strategic partnership program and $11.7 million related to listing services.
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Loan amortization, prepayments, and sales also provide a source of funding for us. Prepayments on loans are influenced significantly by general interest rates, taxi medallion loan market values, economic conditions, and competition.
We also generate liquidity through deposits generated at the Bank, the offering of privately placed notes, through the issuance of SBA debentures, through our trust preferred securities, and through preferred securities at our subsidiaries and have utilized borrowing arrangements with other banks in the past, as well as from cash flow from operations. In addition, we may choose to participate out a greater portion of our loan portfolio to third parties. We regularly seek additional sources of liquidity; however, given current market conditions, there can be no assurance that we will be able to secure additional liquidity on terms favorable to us or at all. If that occurs, we may decline to underwrite lower yielding loans in order to conserve capital until credit conditions in the market become more favorable; or we may be required to dispose of assets when we would not otherwise do so, and at prices which may be below the net book value of such assets in order for us to repay indebtedness on a timely basis.
Dividends and Stock Repurchases
Beginning in March 2022, the Company's board of directors reinstated our quarterly dividend at $0.08 per share. The Company’s board of directors authorized and increased the quarterly dividend to $0.10 per share on October 24, 2023, and authorized and increased the quarterly dividend to $0.11 per share on October 25, 2024, and further authorized and increased the quarterly dividend to $0.12 per share on April 25, 2025, beginning with the dividend paid on May 30, 2025 to holders of record as of May 15, 2025. The Company currently expects to continue to pay quarterly dividends at the current rate for the foreseeable future. We may, however, re-evaluate the dividend policy in the future depending on market conditions. There can be no assurance that we will continue to pay any cash distributions, as we may retain our earnings to facilitate the growth of our business, to finance our investments, to provide liquidity, or for other corporate purposes.
On April 29, 2022, our board of directors authorized a new stock repurchase program with no expiration date, pursuant to which we were authorized to repurchase up to $35 million of our shares, which was increased to $40 million on August 10, 2022, also with no expiration date. During the three months ended September 30, 2025, the Company did not repurchase any of its common stock. Accordingly, as of September 30, 2025, up to $14,406,534 of shares remained authorized for repurchase under our stock repurchase program.
ITEM 3. QUANTITATIVE AND QUALITAT
IVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in disclosure regarding quantitative and qualitative disclosures about market risk since we filed our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 4. CONTROLS
AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a—15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, and have concluded that they are effective as of September 30, 2025 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated our internal control over financial reporting to determine whether any changes occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, and have concluded that there have been no changes that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER
INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
See Note 10 “Commitments and Contingencies” subsections (c) and (d) to the consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for details of the Company’s legal proceedings.
ITEM 1A. RIS
K FACTORS
There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the Securities and Exchange Commission on March 13, 2025.
ITEM 2. UNREGISTERED SALES OF EQUI
TY SECURITIES AND USE OF PROCEEDS
On April 29, 2022, our board of directors authorized a new stock repurchase program with no expiration date, pursuant to which we were authorized to repurchase up to $35 million of our shares, which was increased to $40 million on August 10, 2022, also with no expiration date. During the quarter ended September 30, 2025, the Company did not repurchase any shares of its common stock. Accordingly, as of September 30, 2025, up to $14,406,534 of shares remained authorized for repurchase under our stock repurchase program.
ITEM 5. OTHER INFORMATION
None of our directors or officers
adopted
,
modified
or
terminated
a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during our fiscal quarter ended
September 30, 2025, as such terms are defined under Item 408(a) of Regulation S-K.
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SIGNAT
URES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MEDALLION FINANCIAL CORP.
Date:
November 4, 2025
By:
/s/ Alvin Murstein
Alvin Murstein
Chairman and Chief Executive Officer
By:
/s/ Anthony N. Cutrone
Anthony N. Cutrone
Executive Vice President and Chief Financial Officer
Signing on behalf of the registrant as principal financial and accounting officer.
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