Medallion Financial NASDAQ: MFIN executives said the company posted record loan balances and one of its strongest origination quarters on record in the first quarter of 2026, citing healthy demand across its lending products and continued investment in technology and personnel to support growth.
Loan growth and origination momentum
During the call, President and CEO Andrew Murstein said the quarter reflected “solid performance across our core financial metrics and operating segments,” highlighted by $377 million of origination volume and a record total loan portfolio of $2.62 billion. Murstein said the company saw increases versus the first quarter of 2025 in net interest income, originations, and portfolio size.
Consumer lending remained the company’s largest segment. Murstein reported consumer lending interest income of $73.4 million, up 4.5% year over year, and emphasized that the company is “originating loans to individuals in these niches that have strong credit quality.”
- Recreational lending: Loan book grew 8% to $1.67 billion as of March 31, 2026, representing 64% of total loans. Originations increased 64% year over year to $142.5 million, while interest income rose 7% to $54 million.
- Home improvement lending: Loan book reached $814.9 million, representing 31% of total loans. Originations increased 32% to $64.4 million, and interest income totaled $19.4 million.
Credit performance, pricing, and portfolio metrics
Murstein characterized credit performance as solid. He said 90+ day delinquencies were 0.57% of gross recreational loans and 0.17% of gross home improvement loans. He also cited allowance for credit losses levels of 5.19% for recreational loans (compared to 5.0% a year ago) and 2.49% for home improvement loans (consistent with the prior year). He added that average FICO scores on new originations were 687 for recreational loans and 781 for home improvement loans.
Chief Financial Officer Anthony Cutrone reported net interest income of $54.1 million, up 5% from $51.4 million a year earlier. Net interest margin was 8%, up 6 basis points year over year. Total interest yields were 11.7%, up 5 basis points, while average cost of borrowings was 4.28% versus 4.16% a year ago. At Medallion Bank, the average cost of deposits was 3.95%, up from 3.80% in the prior-year quarter.
Cutrone said the weighted average coupon as of March 31 was 15.11% for recreation loans and 9.82% for home improvement loans. During the quarter, the company originated recreation loans at average rates around 14.75% and home improvement loans around 10%; in April, home improvement originations were running at approximately 9.5% with recreation at similar levels to the first quarter.
Provision for credit losses was $22.5 million, down from $27.7 million in the fourth quarter and slightly above $22.0 million in the prior-year quarter. Cutrone said first-quarter net charge-offs were $17.7 million, or 4.38% of the average recreational portfolio, compared with 4.67% in the year-ago quarter. Home improvement net charge-offs were $2.9 million, or 1.44% of the average portfolio, compared with 1.55% a year earlier.
Asked about credit trends, Cutrone said the company was comfortable with home improvement credit and was seeing improvement in recreational lending year over year, while also noting recreational charge-offs remained higher than the company would like historically. He said the company has made changes in pricing, explaining that Medallion is “a second-look lender” and wants to avoid drifting “towards the bottom of the stack.”
On the potential impact of higher oil prices on recreational lending, Cutrone said it could matter “to some extent,” but noted Medallion tends to finance smaller boats where fuel impact is less significant than for larger vessels. He said the company has not seen a major impact and described the borrower base as generally higher-income W-2 wage earners, while adding that large changes could affect lenders broadly.
Commercial lending, equity investments, and strategic partnerships
Murstein said there were no new commercial originations in the quarter, but the commercial portfolio increased to $119.6 million from $116.1 million a year ago, and the average interest rate rose to 14.18% from 13.14%.
He also noted the company held “more than two dozen equity investments” with a book value of $8.1 million. Gains from equity investments were $0.3 million in the quarter. Cutrone emphasized that the investments are recorded at cost less impairment and that values can be difficult to estimate because many are small business concerns that do not trade publicly; he said gains are recognized upon exits and can fluctuate materially quarter to quarter.
Murstein highlighted the company’s strategic partnership program, which originates loans, earns origination fees and “approximately two to five days of interest” before selling loans to partners or third parties. He said the program generated $170 million of originations in the quarter, with $10.8 million of loans held at quarter-end, and produced about $1.2 million of revenue.
In response to a question about whether the company is shifting away from its traditional lending lines, Murstein said the recreational, marine, and home improvement businesses remain “tremendous cash flow businesses,” and that strategic partnerships and other efforts are still relatively small but provide diversification and “early looks at fintech companies.” Cutrone added that management expects loan and asset growth around 10% in coming years, with much of that expected to come from traditional consumer loans.
Expenses, profitability, capital returns, and funding
Operating costs were $22.4 million, up from $20.8 million in the prior-year quarter. Cutrone attributed the increase largely to higher employee costs and higher loan servicing and collection expenses associated with portfolio growth. While he said operating costs are expected to rise as the company scales, he reiterated the expectation that, over the long term, net interest income should outpace near-term expense growth.
Net income attributable to shareholders was $5.0 million, or $0.20 per diluted share, compared with $12.0 million, or $0.50 per share, in the prior-year quarter. Cutrone said the year-ago period included $9.1 million of higher equity gains.
Book value metrics increased year over year. Cutrone reported net book value per share of $17.10 as of March 31, up from $16.36 a year ago. Adjusted tangible book value per share was $11.83, up from $10.90, excluding goodwill, intangible assets, and the deferred tax liability associated with both. In Q&A, Cutrone said the adjusted tangible book value calculation excludes all goodwill and intangible assets and adds back approximately $42 million of deferred tax liability.
On capital returns, Murstein said the company paid a $0.12 per share dividend during the quarter. He also said that after quarter-end the board approved a second-quarter dividend of $0.14 per share, a 16.7% increase from the prior quarter and a 75% increase since the dividend was reinstated in the first quarter of 2022.
Murstein also said the company closed a $75 million notes offering led by JPMorgan Investment Management, describing it as strengthening funding partnerships and positioning the company for continued growth. Later in the call, management discussed an ambition to grow from $3 billion in assets to $5 billion in assets over the next five years.
Technology investments and staffing plans
Medallion Bank President Justin Haley, who joined the call, said technology investment has been ongoing for several years at a “pretty consistent run rate,” with expectations for marginal increases. He said the last significant capital improvement was in the fourth quarter of 2024 with the launch of a loan servicing system, and that the next major initiative is “likely in the first half of 2027” as the company focuses on loan origination capabilities.
Haley said the bank has been hiring to support growth, including a new SVP of sales and marketing with home improvement experience, a VP of marketing, and a VP of credit, along with additions in technology operations and lending operations. He said the bank could grow headcount by 30 to 40 people in 2026. Cutrone added that headcount at the bank increased by 10 in the first quarter, which he said put the company on track for that range.
Haley also described the company’s approach to tech as including API integration, more tools at the point of sale, and in-house investments to streamline operations as the business scales. He said these tools should help scale strategic partner volume by improving processing capabilities and enabling compliance oversight at greater scale.
About Medallion Financial NASDAQ: MFIN
Medallion Financial Corporation is a specialty finance company that provides asset-based lending solutions to small and mid-sized businesses in the United States. The company's core business activities include secured loans collateralized by business assets such as insurance premiums, commercial real estate, maritime assets and portfolio receivables. Through its insurance premium finance division, Medallion offers short-term loans that allow policyholders to spread insurance costs over multiple payments, while its portfolio financing arm provides funding against a borrower's existing asset portfolios.
Founded in 1998 and headquartered in Minneapolis, Minnesota, Medallion Financial originally established itself in the taxi medallion lending market, extending loans secured by New York City cab medallions.
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